Revenue for Telecoms

148 | Revenue for Telecoms – Issues In-Depth
| 8 Customer options for additional goods or services
Example 59 – Wireless contract with option for data
Telco B contracts with Customer C to provide wireless voice, text messaging and
data services for 24 months for a monthly fee of 100. The customer can purchase
additional data for 2 per megabyte, which is the price for all additional data (i.e. it
is the stand-alone selling price).
The additional data can be added or dropped by the customer without affecting
the wireless service. Therefore, the additional data represent an option to
purchase additional goods or services.
Telco B concludes that because the option to purchase additional data is priced at
its stand-alone selling price, it is not a material right. Therefore, the option is not
identified as a performance obligation at contract inception. Telco B will recognize
revenue for the additional data when it provides the services.
Example 60 – Optional added shared wireless lines
Telco C contracts with Customer D for a wireless plan that provides unlimited
voice and 10GB of data for 80 per month. Telco C permits Customer D to add up
to three additional lines of service and share the 10GB of data included in the
first wireless plan. Telco C sells each additional line for 30 per month, which is the
price for all individual unlimited voice plans with access to shared data (i.e. it is the
stand-alone selling price).
Each additional line is priced at a lower amount than the first individual line as the
addition of each line provides unlimited voice and the ability to share the same
data, rather than conveying another 10GB of data.
The additional lines represent an option to purchase additional goods or services.
Telco C concludes that because the option to purchase additional lines is priced at
its stand-alone selling price, it is not a material right. Therefore, the option is not
identified as a performance obligation at contract inception. Telco C will recognize
revenue for the additional lines when it provides the services.
Example 61 – Wireless with global add-on
Customer C signs an agreement with Telco D for voice, text and data services
for 24 months. All services are unlimited and are provided on a monthly basis.
During Month 6 of the contract, the customer adds an optional global rate plan
for 25 a month, which is the price for all global rate plans (i.e. it is the stand-alone
selling price).
The customer can remove or add the global rate plan as needed, without affecting
the wireless service. Therefore, the global rate plan represents an option to
purchase additional goods or services.
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