The discounts are retroactive. If 2,000 mixers are purchased during the year, a discount of 10% will be applied to all 2,000 mixers.
Section 1: Part 1 Requirement
You are asked to advise MU on how revenue related to the KH transaction should be recognized during January, taking into consideration the volume discounts and warranties, if necessary. Suggest journal entries and disclosures, if required. Your memo should be based on current GAAP.