To expand ... deferred revenue is a liability which is where they have booked it. The issue for me is when will it be recognised.
Received advances are not recognized as revenues, but as liabilities (deferred income), until the conditions (1.) and (2.) are met.
- Revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services. Revenues are realizable when assets received in such exchange are readily convertible to cash or claim to cash.
- Revenues are earned when such goods/services are transferred/rendered. Both such payment assurance and final delivery completion (with a provision for returns, warranty claims, etc.), are required for revenue recognition.
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To expand ... deferred revenue is a liability which is where...
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