Ann: Company appointment of new Chairman, page-36

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squeef

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22/03/18

13:02

Post #: 31948786
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Originally posted by Busy Bean ↑

The biggest impact has been for companies that invoice in advance of providing their service or product. A lot of them were recognising it as revenue straight away at the time of invoice.

This new standard ensures they defer it until either a) ownership of goods is transferred or b) the service is provided.

For example, one of my clients is a media agency and they used to invoice 50% upfront and 50% upon completion. Both of those invoices were straight to revenue. Under the new standard they are having put that initial invoice to balance sheet, and release it only when 50% of the job is actually completed (based on hours worked vs. budget). The impact is a 'hole' in their revenue for a couple of months, but then back to normal in terms of average monthly run rates.

BIG have already been doing it. As far as we can tell, they don't recognise the upfront payment all as revenue. They defer it over 12 months, in line with the standard.

The issue will be if they've been starting to release the deferred income into revenue before the customer accepts the contract. The new standard would definitely rule that out.

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Originally posted by ASX News ↑

This half year report contains a lot of explanatory notes as well as restated rev for 2016 as an example of how switching as an early adopter H1FY18 impacted reporting.

BIG Price at posting: $2.22 Sentiment: None Disclosure: Held
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Ann: Company appointment of new Chairman, page-36

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