Accounting for lifetime memberships: The case of Travel Time Partners, Inc.

Travel Time Partners, Inc. is a travel agency which offers lifetime memberships to its customers. These lifetime memberships entitle the members (among other benefits) to receive a travel magazine. The transaction described in this case offers interesting accounting possibilities for class discussion. The case can be viewed either as a revenue recognition problem or a liability measurement problem. The sliding scale refunds offered on lifetime memberships, the discounts on classified advertisements and the accumulation of points leading to travel discounts for lifetime members, add interesting accounting complexities. The case can also be used to discuss the ethical behavior of management with respect to accounting issues and the role of the auditor in the preparation of financial statements.