Circuit City Stores, Inc (A)

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Case

Reference no. 9-191-086

Subject category: Finance, Accounting and Control

Authors: William J Bruns Jr (Harvard Business School); Susan Harmeling (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 1990

Version: 13 September 2004

Length: 11 pages

Data source: Published sources

Topics: Financial statements; Accounting policies; Accounting procedures; Costing; Marketing strategy; Revenues

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Abstract

Circuit City sells consumer electronic equipment, appliances, and extended service and warranty contracts which supplement those provided by equipment manufacturers. Equipment is sold at low margins, while warranties carry very high margins. A question has been raised about the proper method for recognizing revenues on the warranty portion of the combined sale. Deferring revenue will cut profit reported at the time of sales but may better match costs of warranty service.

Location:

United States

Size:

USD2 billion sales

Other setting(s):

1990