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Tech Companies Log Billion-Dollar Boost From Accounting Change

10/22/2018

Summary

New accounting rules that change the way companies recognize revenue are causing for one-time +$billion boosts for some companies on their quarterly reports. The new accounting rules generally require revenue to be recognized when a product is delivered to a customer and not necessarily when the sale is made.

Key Points

  • The rules generally require revenue to be recognized when a product is delivered to customers
  • The accounting changes don't affect cash, the rules benefit companies by improving their operating margins
  • Companies are logging billion dollar boosts due to the change in revenue recognition 

Discussion Questions

1. Does the rule change about revenue recognition offer more benefit for companies or is does it have more of a negative impact?
2. How is revenue recognition changing due to the new accounting rules?

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