Take this course next!

One of the best ways to put your new financial statements knowledge work is to create a business budget. Our budgeting course feels more like watching a TV show than a boring academic lecture. Check out the trailer and visit ParetoLabs.com to explore our whole course catalog.

You can watch this whole course for free with 14 day free trial! Click below for more details.

Learn More

Day 4

Revenue Recognition (Part 1)

In today’s lesson we cover the concept of revenue recognition. It’s important to know that revenue is not the same as cash. It can be confusing, but we’ve got you covered. This 1 minute video explains it simply. After watching the video below, scroll down to the bottom for your homework.

Your Homework

NIKE sold more than 35 million pairs of shoes at an average retail price of $110 through their website during December 2022. NIKE's manufacturing suppliers were backed up due to the Christmas rush and delivery of shoes prevented 5M pairs of shoes from arriving to consumers until Jan 2023. How much revenue will NIKE be able to recognize in Dec and why?

Scroll down to see the answer.

Answer

NIKE will be able to recognize $3,300M of digital sales in December 2022. $550M will not be recognized as revenue until January of 2023. Even though NIKE received cash upfront in the amount $3,850M for the 35M pairs it sold, it didn't meet the delivery requirement for 5M pairs so NIKE is not allowed to recognize the full amount in December.

We use cookies to improve your experience and to help us understand how you use our site. Please refer to our cookie notice and privacy statement for more information regarding cookies and other third-party tracking that may be enabled.

Intuit Mailchimp logo
Facebook icon
Instagram icon
YouTube icon
LinkedIn icon

© 2023 Pareto Labs Learning Inc.