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Question about CCP revenue recognition

First post
Author
Wardeth Power
KarmaFleet
Goonswarm Federation
#1 - 2016-03-04 17:35:16 UTC
I have an out of game question.

Do you recognize PLEX as a liability on your books as a prepaid subscription and thus a contract of a promise of service, or do you immediately record it as revenue in the accounting period that it was sold?

Just a curious accounting student here.
Neuntausend
GoonWaffe
Goonswarm Federation
#2 - 2016-03-04 17:37:12 UTC  |  Edited by: Neuntausend
That's an interesting question, not just from an accounting point of view.

What happens if the service is shut down and I still have 20 PLEX flying around in my hangars somewhere? If it was considered a contractual liability, I could surely expect a refund, right?
Barrett Fruitcake
Doomheim
#3 - 2016-03-04 17:40:58 UTC
Of course any company with a brain would make the most liberal assumption they are allowed to by law. Roll

It would be silly and kind of stupid for them to assume they have to pay it back in case the servers shut down.


So you should be able to answer your own question. It is revenue for the period it was sold silly nitwit. P



Sentient Blade
Crisis Atmosphere
Coalition of the Unfortunate
#4 - 2016-03-04 17:47:23 UTC
I believe that the last set of financials that were released, PLEX were itemised in liabilities as deferred services, but someone who has a copy of the PDFs would have to double check.
Wardeth Power
KarmaFleet
Goonswarm Federation
#5 - 2016-03-04 17:50:29 UTC
Barrett Fruitcake wrote:
Of course any company with a brain would make the most liberal assumption they are allowed to by law. Roll

It would be silly and kind of stupid for them to assume they have to pay it back in case the servers shut down.


So you should be able to answer your own question. It is revenue for the period it was sold silly nitwit. P





Yes they would. I am curious how they do it so I asked. US GAAP is different from IFRS and I was wondering if a PLEX is a digital gift card. In the US Gift cards aren't allowed to expire so companies like Target have millions and millions in liabilities.
Teckos Pech
Hogyoku
Goonswarm Federation
#6 - 2016-03-04 18:19:32 UTC
Sentient Blade wrote:
I believe that the last set of financials that were released, PLEX were itemised in liabilities as deferred services, but someone who has a copy of the PDFs would have to double check.


I believe this is correct.

A possible escape clause, everything in game CCP technically owns and we all agreed to that as well.

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."--Friedrich August von Hayek

8 Golden Rules for EVE Online

Neuntausend
GoonWaffe
Goonswarm Federation
#7 - 2016-03-04 18:43:39 UTC
Teckos Pech wrote:
A possible escape clause, everything in game CCP technically owns and we all agreed to that as well.

Yeah, that's the usual MMOG clause.
Rowells
Blackwater USA Inc.
Pandemic Horde
#8 - 2016-03-04 18:46:32 UTC
Wardeth Power wrote:
I have an out of game question.

Do you recognize PLEX as a liability on your books as a prepaid subscription and thus a contract of a promise of service, or do you immediately record it as revenue in the accounting period that it was sold?

Just a curious accounting student here.

Considering there is a premium on it, I imagine part of it goes straight to revenue.
Frostys Virpio
KarmaFleet
Goonswarm Federation
#9 - 2016-03-04 19:48:26 UTC
Teckos Pech wrote:
Sentient Blade wrote:
I believe that the last set of financials that were released, PLEX were itemised in liabilities as deferred services, but someone who has a copy of the PDFs would have to double check.


I believe this is correct.

A possible escape clause, everything in game CCP technically owns and we all agreed to that as well.


It's also what I remember and they have another escape clause. The good ol' "No refund" clause.
Steve Ronuken
Fuzzwork Enterprises
Vote Steve Ronuken for CSM
#10 - 2016-03-04 21:57:59 UTC
Frostys Virpio wrote:
Teckos Pech wrote:
Sentient Blade wrote:
I believe that the last set of financials that were released, PLEX were itemised in liabilities as deferred services, but someone who has a copy of the PDFs would have to double check.


I believe this is correct.

A possible escape clause, everything in game CCP technically owns and we all agreed to that as well.


It's also what I remember and they have another escape clause. The good ol' "No refund" clause.



As far as I know, they're treated as liabilities, because, until they're used, they are a month of game time that someone doesn't have to pay for. When they're used (or lost, or spent on something else), they're revenue.

It's so that you don't get dips in revenue, when people decide to plex for a month.

Woo! CSM XI!

Fuzzwork Enterprises

Twitter: @fuzzysteve on Twitter

Ibutho Inkosi
Doomheim
#11 - 2016-03-04 22:00:38 UTC
We call it "funny money".

As long as the tale of the hunt is told by the hunter, and not the lion, it will favor the hunter.

Sturmwolke
#12 - 2016-03-05 06:40:20 UTC
It's written as "Deferred income" under Current Liabilities.
The 2013 amount was 6.9mil.
Eternus8lux8lucis
Duckzer Mining Corporation
RAZOR Alliance
#13 - 2016-03-05 07:31:01 UTC
Yeah if CCP shuts down the servers and people have hordes of plex laying around its gonna be a payday for CCP. Its no wonder they like people hording plex as a "gold" style safety net against isk.

Have you heard anything I've said?

You said it's all circling the drain, the whole universe. Right?

That's right.

Had to end sometime.

Kehro Urgus
Dark Nebula Academy
O X I D E
#14 - 2016-03-05 07:40:34 UTC  |  Edited by: Kehro Urgus
I think in GAAP accounting rules it would be written on the balance sheet as unearned income and a liability. May be a sneaky way of deferring income and taxes...Pirate

Yeeee! 

Indahmawar Fazmarai
#15 - 2016-03-05 08:00:21 UTC
Eternus8lux8lucis wrote:
Yeah if CCP shuts down the servers and people have hordes of plex laying around its gonna be a payday for CCP. Its no wonder they like people hording plex as a "gold" style safety net against isk.


No. As has been pointed, you don't own the PLEX, and there's a no refund clause appliable to unused game time.
Eternus8lux8lucis
Duckzer Mining Corporation
RAZOR Alliance
#16 - 2016-03-05 08:57:16 UTC
Indahmawar Fazmarai wrote:
Eternus8lux8lucis wrote:
Yeah if CCP shuts down the servers and people have hordes of plex laying around its gonna be a payday for CCP. Its no wonder they like people hording plex as a "gold" style safety net against isk.


No. As has been pointed, you don't own the PLEX, and there's a no refund clause appliable to unused game time.

No that IS the point I was making. CCP gets the revenue but has to give zilch in return for it. As they only have to declare it officially when its used. So if its never used....

They only have to claim it as revenue at some point for taxation purposes. But if they have shut down costs, employee severances etc they will be able to still write off most of the revenue or a large chunk of it. So by differing it and getting ppl to horde/save it as "insurance" against inflation in game its to their financial benefit in the long run.

Have you heard anything I've said?

You said it's all circling the drain, the whole universe. Right?

That's right.

Had to end sometime.