Alaska Dividend Airline Coupon Program

This case presents an interesting situation where multiple companies are used to motivate issues determining revenue recognition and expanded disclosure provisions advocated by the Securities and Exchange Commission (SEC). The case involves special promotional offers made by both regional and major airlines for air travel. The situation examined will probably become more common as competitive pressures cause firms to develop new and innovative products to increase asset utilitization. By examining multiple firms offering similar, yet distinctly different, products, the case motivates a number of novel revenue recognition issues that support departures from the traditional practice of deferring revenue recognition until services are delivered. The case also incorporates extraneous factors beyond the strict application of GAM that are commonly faced in actual practice. The expanded disclosure requirements advocated by policymakers [the SEC and the AICPA's Special Committee on Financial Reporting (AICPA, 1994, Improving Business Reporting—A Customer Focus: Meeting the Informal Needs of Investors and Creditors: A Comprehensive Report , Jersey City, N.Y.: AICPA.)] are introduced for the development of a narrative discussion regarding changes in the components of income.