Homestore.com Trips on Barter Accounting; Who's Next?
Homestore.com is not alone in facing a slew of knotty New-Age revenue recognition problems. Dot-coms face complex accounting issues that include not only barter transactions, but also issues of gross vs. net revenues, how to handle multiple revenue arrangements where there is more than one product, whether to record shipping and handling fees as revenues rather than expense recoveries, and how to record coupons, rebates and other sales incentives – just to name a few.
The dot-com accounting issues do not reflect a lack of attention by the Financial Accounting Standards Board (FASB). FASB’s Emerging Issues Task Force has been addressing many of these issues over the past couple of years. Some issues have been resolved; others are still under consideration. But the troublesome nature of the issues has some critics calling for a broader project on revenue recognition. "The Board is considering whether to undertake a major revenue recognition project," explains Todd Johnson, the FASB project manager handling the proposal for the potential project. "At its January 9, 2002 meeting, the Board will discuss whether to issue for public comment a proposal to undertake such a project."