REVENUE RECOGNITION Examples Stig Enevoldsen 18 October 2006.

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©2006 EFRAG BRUSSELS 18. OCTOBER 2006 REVENUE RECOGNITION Examples Stig Enevoldsen 18 October 2006.

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Presentation transcript:

REVENUE RECOGNITION Examples Stig Enevoldsen 18 October 2006

Revenue Revenue recognition? 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?

Revenue Revenue recognition? 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?

Revenue Revenue recognition? 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?

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

Revenue when completed Invoice Matching Completed Revenue and provision Revenue when completed ?

License from 1st Jan but CD-Rom there 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) ???

Revenue Hardware Service Licens

License from 1st Jan but CD-Rom there 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 ???

Revenue Hardware Service Licens Upgrade???

Revenue Revenue recognition? 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?

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

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

Payment request and 36% fee paid 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?

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

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

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