Consider the earnings process applying to a travel agent and an airline company and then defend the criteria for recognizing revenue in each of the two cases.
A travel agent helps a customer purchase an airline ticket and recognizes revenue for its commission at the point the customer purchases the ticket. Some argue that revenue recognition is appropriate because the earnings process of the travel agenthelping the customer make travel plans and arrangementsis largely completed once the customer purchases the ticket. What do you think?
In contrast an airline that provides the same upfront service with its own in-house sales force cannot recognize revenue for these services because the airlines earnings process is incomplete until the flight itself is provided.
Required:After reading the textbook chapter for this week on income concepts discuss the factors to be considered in determining when revenue should be recognized in measuring the income of a business enterprise. Discuss the reasons why you believe that revenue recognition is treated differently under these two different scenarios with in the airline industry.
Your well-written paper must be 2-3 pages in addition to title and reference pages. The paper should be formatted according to theCSU-Global Guide to Writing and APA Requirements.Cite at least two peer-reviewed sources in addition to the required reading for the module.