Amortization of deferred revenue
hey guys,
i have a question from a friend. Hope u guys can help in answering it!
amortization of deferred revenue shows up under COGS. how does this work?
say $10M in revenue that needs to be amortized over 10yrs. how would it show up under income statement?
Let me rephrase:
i got 10M in revenue but the service needs to be provided for 10yrs.
let's say cost of service is 0.5 per year.
so under straight-line amortization, gross profit for every year is 1-0.5 = $0.5
but what is the net rev and the COGS every year?
an answer in the following form would be great
Year 1:
Rev = x1
COGs = y1 (of which amortization is z1)
Year 2:
Rev = x2
COGs = y2 (of which amortization is z2)