Hi, continue with Samuel's comment. The new standard requires to recognize revenue from contracts and since the contractual amount is 36k, this is what should go to contract liability, I suppose, irrespectivly of the actual invoiced amount. Thank you for the video.
you are not right I am afraid. If you issued an invoice to your customer for 1st year, and it is 36 mons contract, then only 12k will be booked as Deferred Rev. as you will receive cash only for 1st 12 mons
@@toml8227 thanks, I haven't thought carefully about the opposite entry! Total contractual 36k must not be sitting in AR but a yearly portion of 12k unless a customer prepays 36k. In reality, I guess, nobody would pay three years in advance anyway.
I believe any setup fee is recognized as immediate revenue and deferred for a minimum of 36 months or higher if a contract is more than 36 and released to actual after the term ends.
Hi Samuel, great question. If you invoice the customer for the full 36K that covers three years, then yes, you would book the full amount to deferred. I have typically invoiced annually which would only book 12K to deferred revenue.
Thank you for the clear walkthrough!
Glad it was helpful!
very nice and detailed example. thank you sir
Superb !
Great info. Thank you
This was helpful as I work thru my Workday activities.
Nice explaination
Very good quick session. Can you have a session on SaaS cost accounting guidance
Can you tell me more?
thanks for the video
The video sound is pretty good, beyond my imagination
Hi, continue with Samuel's comment. The new standard requires to recognize revenue from contracts and since the contractual amount is 36k, this is what should go to contract liability, I suppose, irrespectivly of the actual invoiced amount. Thank you for the video.
you are not right I am afraid. If you issued an invoice to your customer for 1st year, and it is 36 mons contract, then only 12k will be booked as Deferred Rev. as you will receive cash only for 1st 12 mons
@@toml8227 hi, what if the contract is non-cancellable?
@@geraklitus then 2nd invoice will be issued as per billing schedule, and another 12k will be booked on deferred rev.as a libility.
@@toml8227 thanks, I haven't thought carefully about the opposite entry! Total contractual 36k must not be sitting in AR but a yearly portion of 12k unless a customer prepays 36k. In reality, I guess, nobody would pay three years in advance anyway.
Hey, what do you recommend an accounting tool to automate the revenue recognition from deferred revenues?
Yes, please contact me here. www.thesaascfo.com/contact/
Do you recognize revenue for Implementation fees for the life of the contract?
I believe any setup fee is recognized as immediate revenue and deferred for a minimum of 36 months or higher if a contract is more than 36 and released to actual after the term ends.
Hi, why would you not book the full 36k to deferred revenue when the contract is signed?
Hi Samuel, great question. If you invoice the customer for the full 36K that covers three years, then yes, you would book the full amount to deferred. I have typically invoiced annually which would only book 12K to deferred revenue.
@@TheSaaSCFO Thank you!