Deferred Revenue write down in Income Statement
Can anyone please explain with examples about what the deferred revenue write down in Income statement is???? I got the concept of deferred revenue and its effect on balance sheet as it would debit the cash and credit the deferred revenue and once the service is provided, it will show up on the income statement as revenue, too. But, But, But,,,, what is deferred revenue ''write-down'' in Income Statement?? any examples? Thank you so much in advance and would appreciate any kinds of advice
When you recognize Def. revenue you do it because you were cash paid for something not completed yet. let's take the example of a 2-year suscription for porno flics. The wanker pays 200 straight on jan/01 on theI/S and B/S, assuming no costs and no taxes blablabla Revenue 100 for net income of 100 you get : Dr. Cash +200 | Cr. Equity 100 , Cr. Def Rev 100 now imagine the guy breaks his dick, he can't jerk anymore after the first year. he asks for the rest of the money back and you give it to him. on your I/S you will need to charge a 100 loss against Def Rev given the assumptions of no taxes and no costs blablabla and lastly on the B/S : Cr. Cash 100, Dr. Def Rev 100
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