SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Wind River going up, up, up!
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Allen Benn who wrote (7939)6/8/2000 1:37:00 AM
From: cfoe   of 10309
 
As far as I know, there is no accounting requirement that WIND prorate pre-paid royalties, for the very reason you mentioned: there is no obligation to deliver anything further.

First, a disclaimer - it has been years since I donned my green eyeshade. However, I believe the above statement is not completely accurate. I mention this because how pre-paid royalties are treated can affect earnings.

If the royalty is a one-time payment and is deemed earned when received with no future obligation then it could properly be recorded as revenue 100% when received.

However, even if there is no obligation for future work, but the royalty continues based on future sales by the licensee, the prepaid royalty would usually be matched to the licensee's sales and therefore would be recognized by the licensor (WIND in this case) over time. This would be so even if it were a fixed and non-refundable royalty pre-payment.

Now, if the licensee decided halfway through development of the product to abandon it, so no more royalties would be expected, the licensor could then advance the recognition of the pre-paid royalties.

In the end, a company's auditors should make sure that revenues are matched with tie in an appropriate manner depending on the circumstances.

As I said, it has been years since I dealt with this stuff, but it is how I remember things.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News