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REVENUE RECOGNITION

REVENUE RECOGNITION. Examples Stig Enevoldsen 18 October 2006. 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 .

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REVENUE RECOGNITION

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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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