Accounting for Revenue Recognition in the Gig Economy: An Instructional Case

Abstract

The “gig” economy has exploded as more consumers purchase products and services from gig businesses and more workers pursue gig employment. This case uses a fictional gig company, HungryHound (HH), mirroring services provided by Grubhub, DoorDash, and UberEats, to expose students to the complexities of gig businesses and to areas requiring judgment in the revenue recognition standard. Specifically, students determine the appropriate revenue treatment among varying alternatives and apply the guidance in identifying the customer(s), determining principal and/or agent classifications, and reporting the financial statement effect for transactions. Completion of the case requires critical thinking in evaluating and applying ambiguous revenue guidance. Students also learn about current variation in accounting treatments among gig companies. The case is designed to give instructors flexibility, where case deliverables can be used together or as standalone assignments and can be deployed in an undergraduate or graduate intermediate accounting course or capstone course.