Circuit City sells consumer electronics, home appliances and extended service and warranty contracts that complement those provided by equipment manufacturers. Equipment sold at low margins, while the guarantees have a very high margin. A question was raised about the proper method of revenue recognition under the guarantee of the combined sales. Delaying income decreased profit reported at the time of sale, but can better match the cost of warranty. "Hide
by William J. Bruns Jr., Susan S. Harmeling Source: Harvard Business School 11 pages. Publication Date: November 20, 1990. Prod. # Hundred ninety-one thousand and eighty-six-PDF-ENG
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