4 ms·
Any accountants here? Isn't this just an accounting trick? They're going to lose revenue. But can't they now issue this "grant", and then pretend they aren't
by onlyrealcuzzo 7y ago
Any accountants here?
Isn't this just an accounting trick? They're going to lose revenue. But can't they now issue this "grant", and then pretend they aren't losing revenue -- they're just issuing a grant?
Or is that not how it works? I don't know, but would like to know.
- judge2020 7y agoThey're still losing revenue in that, when these ad credits are spent, they're not receiving any actual money from advertisements that would have shown up in place of these free ads.
- treyfitty 7y agoI’m not an accountant, but I do know that gift cards should be recognized as revenue at the time of services rendered, not at the time of a sale of a gift card. Are grants similar in that a “gift card” is being granted and the revenue can be realized at a later date?
- onlyrealcuzzo 7y agoI'm not an accountant, but I believe that's revenue recognition. I sell you a $10 gift card today. I can't recognize the revenue until you spend the $10. However, if I know you're going to spend $10 less at my business this year, I can GIVE you a $10 gift card. Then, hopefully, you'll come to my business as usual. When you spend the $10, I can record that as revenue, and then I can record a $10 expense for the cost of sale. Top line doesn't change. I think. But I'm not an accountant. I don't know.
- onlyrealcuzzo 7y agoTechnically, yes. My question is if this is an accounting trick to mask that. If people spend $10 grant money, I believe you can record $10 revenue and $10 expenses. Top line is artificially $10 higher. Bottom line is unchanged. Again -- this is how I think it works. But I don't know.