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Super Electronics Case

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Submitted By bpieri
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ISSUES IN ACCOUNTING EDUCATION Vol. 27, No. 2 2012 pp. 461–474

American Accounting Association DOI: 10.2308/iace-50005

Super Electronics, Inc.: Financial Reporting of Sales Incentives and Vendor Allowances Using FASB Codification
Mahendra R. Gujarathi
ABSTRACT: Super Electronics, Inc., a specialty retailer, has recently initiated several sales incentives and has entered into a long-term purchase arrangement with a major vendor that entitles it to sliding discounts based on its level of purchases. Using FASB Accounting Standards Codification, you are to determine whether the Company’s existing policies comply with Generally Accepted Accounting Principles (GAAP). You are also required to evaluate the soundness of the proposals that SE’s management has made during the process of annual audit and explore plausible motivations behind them. The case provides an opportunity to examine several technical and conceptual accounting issues in a real-world setting, strengthen accounting research capabilities, understand implications of the choice of an accounting policy for performance measurement and financial statement analysis, and develop advanced critical thinking and professional judgment skills. Keywords: FASB codification; vendor allowances; customer loyalty programs; membership fees; price protection plans.

CASE Company Overview uper Electronics, Inc. (SE or the Company) is a regional specialty retailer of consumer electronics, home office products, entertainment software, appliances, and related services. The Company has committed to the goals of growth and innovation ever since its incorporation in 1990. It was among the first few large retailers to sell emerging electronics items such as digital cameras, camcorders, flat-panel televisions, and GPS navigation systems to the mass market. SE provides extensive training about the new products to its sales associates so that

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