The Securities and Exchange Commission (“SEC”) reviews a company’s financial statements to ensure that they conform to U.S. GAAP before allowing the company to conduct an initial public offering and list on a major U.S. stock exchange. As part of its review, the SEC may write letters to the company to ask for justification for its particular accounting choices and policies. The company must write back with satisfactory explanations before it may conduct the initial public offering. In some cases, the company must change its accounting choices and policies to satisfy the SEC’s critique.
In June 2011, Groupon Inc. began the process of conducting an initial public offering by filing a form S-1 with the SEC. (The Form S-1 has the same sections as a 10-K, but in a different order and with some additional disclosure.) The SEC questioned the company’s revenue recognition policy in a series of correspondences. Ultimately, Groupon changed its revenue recognition policy and financial statements in response to these critiques.
In this paper, you will examine Groupon Inc.’s business, its revenue recognition policy, the SEC’s critique, and the change in Groupon Inc.’s revenue recognition policy. Address the following questions:Based on the Business description section (beginning on p. 68 of the S-1 dated June 2, 2011, Groupon S-1 2011-06-01.pdfActions ), describe what product Groupon sells and how the company makes money. Who are its customers? Who are its suppliers? What are the company’s competitive advantages, if any?
Even though the revenue recognition steps we covered in class and in the textbook were integrated in U.S. GAAP in 2016, imagine that these rules were in place in 2011. Based solely on the Business description, how would you apply these rules to recognize revenue for Groupon. Write an ideal revenue recognition policy for Groupon that incorporates the five steps.
Now look at the company’s revenue recognition policy in the financial statements, which begin on page F-1.
Describe how Groupon determined when and how much revenue recognize.
Explain how Groupon’s revenue recognition policy differs from the revenue recognition policy you proposed in answering question 2.
Now look at the SEC’s letter to Groupon, dated June 29, 2011, Groupon SEC letter 2011-06-29.pdfActions . See paragraphs 62 to 67 regarding Groupon’s revenue recognition policy.
What does the SEC question about Groupon’s revenue recognition policy?
What is the relevance of point 63 vis-à-vis point 62?
Finally, look at Groupon’s 10-K for 2011, Groupon 10-K 2011.pdfActions . This 10-K was issued after the company changed its revenue recognition policy, the SEC approved the new accounting policy, and the company conducted its initial public offering.
How does this new revenue recognition policy address the SEC’s critique?
How much did the company’s reported revenue change as compared to what was reported in the S-1?
Which means of accounting manipulation had Groupon used to inflate its revenue?
have instated a Communist regime, was widely spread and, as Folch-Serra argues ‘systematically enforced through schools and textbooks, the pulpit, the Fascist institutions and the media’ (p. 228). There was heavy censorship of news that could have challenged this image, which Folch-Serra shows was ‘illustrated by the Spanish media’s disregard of the Nobel prizes awarded to Juan Ramón Jiménez for literature in 1956 and Severo Ochoa for science in 1959’ (p. 229). This leads on to the contradictory nature of Franco’s treatment of the Republicans since, as well as spreading defamatory comments about their nature, there was also, as Folch-Serra explains, a ‘suppression of information about their fate and whereabouts’ (p. 229) which drew from a ‘deliberate policy of oblivion and silence’ (p. 229). By winning the Civil War, Franco also won the fortune of being able to rewrite history and, as Folch-Serra confirms, he was able to ‘concoct a uniform image of the defeated as one and the same’ (p. 227). Amongst other forms of propaganda, education allowed Franco to disseminate his version of events as truth, which can be seen through school textbooks which Xavier Laudo elaborates on how they ‘spoke of the desertion of Republican soldiers’ as well as presenting Republican Spain as the ‘enemy within’ (p. 442) who were ‘responsible for the erosion of the nation’s Christian faith’ (p. 442). Assmann further shows how this ‘one sided version of history’ (p. 64) not only ‘protected’ (p. 65) and legitimised Franco, but also ‘prolonged the enemy stereotype of the murdered communists and democrats’ (p. 65). Thus, it can be seen that Franco manipulated the memory of the Civil War during his dictatorship and how his policies towards the Republicans after the war allowed him to promote his narrative as the truth and legitimise his position. This collective amnesia that Franco wanted to induce, discredited and erased his opponent from history. However, Assmann adds that this ‘silence did not dissolve the memory of the traumatic past’ (p. 66) and did not fully discredit his opponents, as individual memories of the events were ‘materially preserved in the earth and in families’ (p. 66). Memory also featured heavily in Franco’s propaganda, with many references made to returning Spain to the greatness it had once experienced. Franco’s message regarding the Republicans was spread through education and Laudo explains that so was the image of the Civil War as a ‘crusade’ (p. 438) such as during the Middle Ages. Zheng Wang describes how school textbooks can be used as ‘instruments for glorifying the nation, consolidating its national identity and justifying particular forms of social and political systems ‘ and how the rewriting of school textbooks can be used to ‘legitimise the new regime’ (p. 45). This is evident on the front cover of El Libro de España, which features a boat sailing across the globe, against the backdrop of the Spanish flag. This reminds the viewer of the Spanish Empire, as Laudo confirms, ‘stressing the cross-Atlantic colonialist adventures in the Americas’ (p. 443), and the power and glory that this brought, ‘promoting a spirit of patriotism’ (p.443). Through this, Laudo explains that Franco was able to propagate his ‘vision of Spain’s history, its Hispanic mission for imperial glory’ (p. 453). Religious references were frequently seen in Franco’s propaganda, and comparisons were made to the Catholic monarchs and the unity and greatness Spain experienced under them. Miriam >GET ANSWER