4 ms·

> Why don't they count it as revenue the moment the credits are issued? Because the corresponding service hasn't been rendered yet. Conceptually you want the r

by Havoc 1y ago

> Why don't they count it as revenue the moment the credits are issued? Because the corresponding service hasn't been rendered yet. Conceptually you want the revenue and the costs to generate it recognised at roughly same time else your P/L number is volatile/meaningless

thaumasiotes 1y ago
Well, your actual profits and expenses are volatile. Is it bad for your accounting to reflect the reality of your company?
- Havoc 1y ago
  > reflect the reality of your company Accounting is an exercise in standardization and communication. Like a network protocol you want different parts speaking the same language even if it requires some constraints and abstractions The info you describe is something you’d have FP&A/MI team do. There you can do whatever the team thinks is best to capture things in a unique manner Mixing the two is generally a recipe for disaster (and IRS audits)
  - thaumasiotes 1y ago
    What? This is just the difference between cash accounting and accrual accounting. Using cash accounting isn't going to get you audited, or even raise any eyebrows.
stockresearcher 1y ago
The IRS allows companies to choose between cash-based and accrual-based accounting. Most companies choose accrual-based accounting. It's much more complicated, and one of the things about it is that you don't don't get to count money collected as revenue until the customer actually "uses" it to buy something from you. That's just the way that goes. Remember - the company chose this method of accounting. If you form a company and don't make the choice, the IRS will assume you are using cash-based accounting. But here's something interesting - Warren Buffett explaining how liabilities are insanely profitable for Berkshire Hathaway (except that he calls it "float" instead of "liabilities") [1]. Liabilities are just a number on a chart, neither good nor bad. How you handle them, how you communicate about them, etc. That's what matters. [1] https://www.berkshirehathaway.com/letters/2009ltr.pdf https://www.berkshirehathaway.com/letters/2009ltr.pdf
- toast0 1y ago
  The IRS allows for cash-based accounting, but GAAP requires accrual-based accounting, if you meet the thresholds and have to file statements with the SEC, then you have to at least follow GAAP for the statements. I don't know if Anthropic needs to file statements with the SEC, but they might be trying to get their books aligned for it.

by Havoc 1y ago

thaumasiotes 1y ago

Well, your actual profits and expenses are volatile. Is it bad for your accounting to reflect the reality of your company?

Havoc 1y ago
> reflect the reality of your company Accounting is an exercise in standardization and communication. Like a network protocol you want different parts speaking the same language even if it requires some constraints and abstractions The info you describe is something you’d have FP&A/MI team do. There you can do whatever the team thinks is best to capture things in a unique manner Mixing the two is generally a recipe for disaster (and IRS audits)
- thaumasiotes 1y ago
  What? This is just the difference between cash accounting and accrual accounting. Using cash accounting isn't going to get you audited, or even raise any eyebrows.

stockresearcher 1y ago

The IRS allows companies to choose between cash-based and accrual-based accounting. Most companies choose accrual-based accounting. It's much more complicated, and one of the things about it is that you don't don't get to count money collected as revenue until the customer actually "uses" it to buy something from you. That's just the way that goes. Remember - the company chose this method of accounting. If you form a company and don't make the choice, the IRS will assume you are using cash-based accounting. But here's something interesting - Warren Buffett explaining how liabilities are insanely profitable for Berkshire Hathaway (except that he calls it "float" instead of "liabilities") [1]. Liabilities are just a number on a chart, neither good nor bad. How you handle them, how you communicate about them, etc. That's what matters. [1] https://www.berkshirehathaway.com/letters/2009ltr.pdf https://www.berkshirehathaway.com/letters/2009ltr.pdf

toast0 1y ago
The IRS allows for cash-based accounting, but GAAP requires accrual-based accounting, if you meet the thresholds and have to file statements with the SEC, then you have to at least follow GAAP for the statements. I don't know if Anthropic needs to file statements with the SEC, but they might be trying to get their books aligned for it.