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Revenue Recognition Examples & Alternatives for Various Sales Scenarios

Explore revenue recognition scenarios like chair, TV, bonds sales, customer returns, software licensing, and more. Learn about invoice matching, completion conditions, and sub-supplier contracts for revenue recognition alternatives. Understand payment structures for phone-up services and telecom sales.

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Revenue Recognition Examples & Alternatives for Various Sales Scenarios

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  1. REVENUE RECOGNITION Examples Stig Enevoldsen 18 October 2006

  2. Revenue • The chair handed over to the customer and cannot be returned • Chair handed over, but can be returned (department store) • TV handed over and paid but entire revenue can be returned on demand after 10 years Revenue recognition?

  3. Revenue • Bonds sold and handed over and buy back commitment (securitisation)? • Aeroplane or ship sold but can be sold back after 6 years for say 55% of the price Revenue recognition?

  4. Revenue • Goods or software license invoiced and handed over to agent but can be given back • Goods sold and handed over but price decided when the goods are sold on to the final customers Revenue recognition?

  5. Revenue Alternatives: 1Revenue and provision 2 Defer revenue until completed contract 3 Matchning/ earnings

  6. REVENUE Invoice Matching Completed Revenue and provision Revenue when completed ?

  7. Revenue Conditions License from 1st Jan but CD-Rom there Hardware there Service from 1 jan • IT-firm sells • License to software • Hardware • Service (3 years) ???

  8. Revenue Hardware Service Licens

  9. Revenue Conditions License from 1st Jan but CD-Rom there Hardware there Service from 1 jan Only if made available • IT-firm sells • License to software • Hardware • Service (3 years) • Potential upgrade ???

  10. Revenue Hardware Service Licens Upgrade???

  11. Revenue Sub-supplier • Contract with customer signed, and sub-supplier will deliver immediately • Sub-s will deliver in a month • Sub-s will have to produce Revenue recognition?

  12. Revenue PHONE UP A/S (Earns up to 60% of first years fee)

  13. Revenue • Call to customer • Customer payment • Fee earned per month the customer stays with client • Fee earned after 9 / 15 months 36% cash received upfront 4% earned per month the customer stays Right to 36% non-refundable after 9 months 60% after 15 month

  14. PHONE-UP Call and accept 13 weeks follow up 15 months 9 m RETURN? 36% earned if paid Payment request and 36% fee paid 60% earned if paid Customer payment?

  15. Revenue Call and Payment 15 completed Customer accept Performance obligation and rights to consideration

  16. Revenue - measurement • Telecom sells • Mobile phone • Connection • Stay at least 6 m Conditions Mobile 1 € Normal price for the calls ???

  17. EFRAG Avenue des Arts 13-14 1210 Brussels Belgium WWW.EFRAG.ORG

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