SEC Form 17-A: Annual Report - the solid group inc website
SEC Form 17-A: Annual Report - the solid group inc website
SEC Form 17-A: Annual Report - the solid group inc website
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Revenue is recognized to <strong>the</strong> extent that <strong>the</strong> revenue can be reliably measured, it is<br />
probable that <strong>the</strong> economic benefits will flow to <strong>the</strong> Group, and <strong>the</strong> costs <strong>inc</strong>urred or to<br />
be <strong>inc</strong>urred can be measured reliably. In addition, <strong>the</strong> following specific recognition<br />
criteria must also be met before revenue is recognized:<br />
(a)<br />
(b)<br />
Rendering of services – Revenue is recognized when <strong>the</strong> performance of contractually<br />
agreed services have been substantially rendered.<br />
Sale of goods (o<strong>the</strong>r than sale of real estate) – Revenue is recognized when <strong>the</strong> risks and<br />
rewards of ownership of <strong>the</strong> goods have passed to <strong>the</strong> buyer. This is generally<br />
when <strong>the</strong> customer has taken undisputed delivery of goods.<br />
For sales involving multiple element arrangements, customers pay <strong>the</strong> bundle<br />
amount, which <strong>inc</strong>ludes <strong>the</strong> LCD television and <strong>the</strong> internet and/or cable<br />
subscriptions. Total selling price is allocated among and/or between <strong>the</strong> items<br />
<strong>inc</strong>luded in <strong>the</strong> bundle based on <strong>the</strong> relative fair values of <strong>the</strong> separately<br />
identifiable components.<br />
The recognition criteria for each of <strong>the</strong>se components are described as follows:<br />
• Sale of LCD television – The allocated revenue is recognized when <strong>the</strong> risks and<br />
rewards are transferred to <strong>the</strong> buyer. These are recognized fully in <strong>the</strong><br />
con<strong>solid</strong>ated statement of <strong>inc</strong>ome as part of Sale of Goods.<br />
• Rendering of services and o<strong>the</strong>r <strong>inc</strong>ome from internet subscription – The allocated<br />
revenue is initially recorded as Unearned Subscription Income under <strong>the</strong><br />
Trade and O<strong>the</strong>r Payables in <strong>the</strong> con<strong>solid</strong>ated statement of financial position<br />
at <strong>the</strong> time <strong>the</strong> internet connection is installed and is subsequently recognized<br />
on a straight-line basis over <strong>the</strong> two-year contract period.<br />
• O<strong>the</strong>r <strong>inc</strong>ome – The allocated revenue is initially recorded as Unearned<br />
Subscription Income under <strong>the</strong> Trade and O<strong>the</strong>r Payables in <strong>the</strong> con<strong>solid</strong>ated<br />
statement of financial position at <strong>the</strong> time <strong>the</strong> cable connection is installed and<br />
is subsequently recognized on a straight-line basis over <strong>the</strong> two-year contract<br />
period.<br />
(c)<br />
(d)<br />
Rentals – Revenue is recognized on a straight-line basis over <strong>the</strong> duration of <strong>the</strong><br />
lease term (see Note 2.16).<br />
Warranty and network support fee (shown as part of Rendering of Services) – Revenue from<br />
warranty is recognized upon actual rendering of in-warranty and out-of-warranty<br />
services to <strong>the</strong> customers. Revenue from network support is accrued monthly as<br />
a percentage of sales made by Sony Philippines, Inc. (Sony). Effective April 2009,<br />
network support fees is recorded at a fixed amount of P1.25 million per month.