CCPC is considering how it should account for the Fresh & Bright coupon drop that took place on October 1, 2009. In doing so, CCPC asks for your help. Answer the following questions using the Codification when necessary. Be sure to cite the relevant components of the Codificationin your discussion. You do not need to write you answer up in essay form. You can simply number your answers as the questions are numbered below. Please write your answers for each question in complete sentences, and use good grammar and punctuation.
1. What are the accounting issue(s) and the relevant components of the authoritative
literature?
2. When should CCPC recognize the effects of the Fresh & Bright coupon drop in its
financial statements?
3. What is the dollar amount of the effect of the Fresh & Bright coupon drop on CCPC’s financial statements?
4. What would constitute ‘‘sufficient evidence’’ to support CCPC’s expected redemption rate of 2 percent?
5. What are the accounting implications if CCPC’s estimated redemption rate changes to 2.5 percent at a later point in time?
6. How should the effects of the Fresh & Bright coupon drop be reflected in the incomestatement?