Assignment:
Background and Facts
Please see examples on Isidore for further ideas on what to include in each section. This section can be a few sentencesthat provides background on the company. For example, is this a public or private company? What is its primary business?What event (without going into a lot of detail) has taken place that is the reason for evaluating the accounting issues that have arisen? It is acceptable and encouraged to state at the end of this discussion "The purpose of the memorandum is to...."Write the memo as of today. Your role, as a member of the accounting department, is to research specific issues for the implementation of Topic 606 and how it applies to Potbelly Corporation.
Issue #1:Does the Company have more than one performance obligation to the franchiseein return for the franchise fee it receives at the beginning of the franchise contract?
Background
Make sure someone unfamiliar with the issue who has not read the company's financial statements can understand the issue at hand and the significance of the issue based on your background. Describe pertinent facts that have happened in the real world. Then, describe any relevant accounting decisions by the Company about Issue 1.
Conclusion
Tip:In a few sentences, summarize your conclusion for the issue. The next section (Research and Analysis) describes the research you found andhow you arrived at your conclusion. The second part of the previous sentence is the analysis and is important.
Research and Analysis
Tip: Make sure this section includes
1) what you find in the codification (a well-cited quote is acceptable) and 2) your interpretation of what you find in the codification including how it applies to the Company and leads to your conclusion. Keep in mind that you want your memo to be clear to someone who does not know the company's issues at hand. Do not make the reader work or re-think the issues.
Issue #2:Does a loyalty or discount program such as Potbelly Perks create a performance obligation at the time that customers earn points towards future rewards? How does this impact the allocation of the transaction price, if at all?
Issue #3:When should the Company record revenue from gift card breakage?