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0 pointslelanthran9mo ago0 comments

> If the contract states the credits expire EOY all bets are off. Implicitly makes the credits the 'delivery' not the service itself.

I wasn't addressing what the contract states and what the effect is; I was addressing the accounting rule for service sold but not yet delivered.

As long as the credits are usable (i.e. not expired), those credits are a liability on the books and financial statements must reflect that. This is why they need to expire the credits after a certain time.

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graemep9mo ago

The argument hing made is that the credits are what is being delivered.

It may or may not be correct, but it is not obvious to me that the revenue should be recognised when the credits are used or expire rather than when they are sold.

its probably defined somewhere in the rules (I assume US GAAP in this case?)

lelanthranOP9mo ago

> The argument hing made is that the credits are what is being delivered.

Right, I understand that.

> but it is not obvious to me that the revenue should be recognised when the credits are used or expire rather than when they are sold.

The realisation (or recognition, if you want) of the revenue is irrelevant. Once you have already accepted payment for a service, that service is a liability until you deliver it.

So, unless they are cooking their books to say that they are not obligated to provide the service after accepting payment, I don't really see how they can report it on their statements as anything other than a liability.

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