Deferred Revenue Accounting Q
Hey guys,
Got this question in an IB interview about deferred revenue, was wondering if anybody knew the answer.
10 Dollars is collected in the period prior, but was not recognized as Revenue yet. In this period, the service is provided and the Deferred Revenue is recognized as Revenue. Walk me through the change to 3 financial statements.
I have some of it, but am missing some parts. I know where I'm missing out is somehow related to a change in Deferred Taxes. Also, change in cash needs to be 0, as the cash was collected in the period prior.
IS: Revenue up 10 Tax rate 40% Net Income up 6
CF: CF Operations up 6 from from Net Income Somehow change in DTA/L? Cash change needs to be 0
BS: A: Not too sure...
L&E: Retained earnings should be up 6? Deferred Revenue Liability written down by 10?
Any help would be greatly appreciated, thanks
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