I am trying to understand the commentary made by management that because of the 4 year contracts to consumers under the Radio Rentals division, reported income is down.
Note 2 to the accounts shows segment revenue
Note 3 to the accounts shows revenue recognition.
Does anyone understand the interaction between these two notes.
Note 3 shows operating leases at $42.9 million revenue which I assume is from Radio rentals. Yet the Radio rentals revenue per note 2 is $251 million.
Then as to the revenue recognition points in note 3,
How do they actually work?
Operating leases revenue recognised on a straight line basis. But it is only $42.9 million. How do they get this number?
Finance lease revenue is large at $116million, but its revenue recognition point is at the time the contract is entered into.
This is significant because then from a P&L perspective its all lumped into the period when the contract is entered into, its not recognised over the course of the lease.
Interest revenue at $127 million is large, but in my opinion safely accounted for on an accrual basis.
The reason I am trying to focus on this is to understand their business model.
Especially the radio rentals division.
Help on this would be appreciated.
I am trying to understand the commentary made by management that...
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