Refer to P&G’s (Procter & Gamble Company) financial statements and notes to answer the following questions:
Using the notes to the consolidated financial statements, determine P&G’s revenue recognition policies. Discuss the impact of trade promotions on P&G’s financial statements.
Give two examples of where historical cost information is reported in P&G’s financial statements and related notes. Give two examples of the use of fair value information reported in either the financial statements or related notes.
How can we determine that the accounting principles used by P&G are prepared on a basis consistent with those of last year?
What is P&G’s accounting policy related to advertising? What accounting principle does P&G follow regarding accounting for advertising? Where are advertising expenses reported in the financial statements?
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P&G’s Revenue Recognition Policies
The P&G’s revenue recognition policy is also includes the shipping and handling costs in revenue because these costs are generally included in the price charges to the customers. Moreover, P&G’s recognizes revenue or sales when the product, ownership and less risk are fully transferred to the customer means if the product and risk fully not transfer to the customer the company not included it in its revenue (Procter & Gamble, 2013). P&G’s also offers cash discount offers to its customers and reduced the amount of cash discount directly in revenue. The company revenue is recognized on a gross basis in a transaction such as promotion percentage and partner’s net sales also included in revenue. In addition, all expenses related to sales, marketing, research and development activities included in general and administrative expenses....
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