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Technology Stocks : Wind River going up, up, up!
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To: JMD who wrote (7936)6/7/2000 9:31:00 PM
From: cfoe  Read Replies (2) of 10309
 
Mike - You arrive at the correct conclusion, but your reasoning is not fully there. As you say,deferred revenue is a liability and is sometimes called "unearned revenue."

Basically revenue is deferred when value is received (cash) for value that has not yet been delivered (product). It could be the product has been physically delivered but not yet accepted. It could be a subscription for future services to be delivered.

If the product includes some future services (like maintenance) and part of the purchase price can be identified as applicable to that future service, this revenue would also qualify for deferral.

This is about as much as I remember from my accounting days of many (many!) years ago. <ggg>
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