This paper considers the assessment of payments to customers in various practical examples, covering the purchase of advertising space, physical and digital ‘slotting fees’, outsourced advertising sales and video game prizes.
Payments to customers can present accounting challenges in many sectors, but particularly in a fast-evolving media and technology landscape, where two companies are frequently both supplier to, and customer of, each other.
A media company’s assessment of whether payments to its customers are independent or directly linked to sales transactions determines whether the company recognises these payments as costs or deductions from revenue. Careful communication of appropriate revenue recognition accounting policies for payments to customers is therefore a key part of managing capital markets stakeholders.
This paper covers: