1. REVENUE RECOGNITION
Examples
Stig Enevoldsen
18 October 2006

2. 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?

3. 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?

4. 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?

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

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

7. 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)
???

8. Revenue
Hardware Service
Licens

9. 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
???

10. Revenue
Hardware Service
Licens Upgrade???

11. 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?

12. (Earns up to 60% of first years fee)
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 months
60% after 15 month

14. 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?

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

16. 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
???

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