During this question-and-answer session, LeaseQuery`s Sarah O`Sullivan and BDO`s Mike Stevenson will discuss the overall outlook for updating the accounting standards proposed by the FASB, their potential effects on equipment rental companies and how equipment developers can prepare. The main questions to be answered are the « service » provided and how it is provided. The challenges ahead if the service contract also uses a resource as an integral part of the provision of that service. Assuming that an asset produces a form of utility that can be measured economically; For example, a railway car is used to move grain, and the contractor pays for the movement of grain on the basis of loads. The economic benefits of the railway car are generated by the revenue generated for the movement of this grain. The party that receives the payment for the shipment is the service provider and they determine the resources that must be used to move the grain. If, as part of its function, the supplier supports a contract for the use of the railcars and also assumes the obligation to pay for the rental of the vehicles, then the contract between them and the owner is a lease agreement, even if the lease has certain maintenance elements. In many cases, the decision to use the proportional benefit or delivery method to accommodate a service contract requires a significant evaluation. CRI 7701 (e) (3) refers to certain facilities such as solid waste treatment facilities, cogeneration facilities, alternative energy or water treatment facilities and is a little easier to do: if CSA 605-35 does not apply to a service delivery contract, it is appropriate to check whether other specific CSA guidelines (for example. B sector guidelines for cable television, financial services) , health care, apply to the service contract. If there are no other specific guidelines for the SERVICE contract in the CSA, the general guidelines for revenue recognition should be applied in CSA 605. Revenues should be accounted for under this direction when they are earned and realized or achievable.
While CSA 605 contains specific guidelines for addressing certain issues (for example. B return rights, sales subject to a guaranteed minimum value for resale), the only general guide to determining whether revenue has been generated and realized or achievable, provided by Securities and Exchange Commission staff in theme 13, Revenue Recognition. The sab theme 13 guidelines are codified in CSA 605-10-S99 and must be followed if there are no other guidelines directly applicable to the CSA. According to LA SAB theme 13, the following four criteria must be met before revenue is recorded: from an economic point of view, if the recipient had that right, the service provider would likely need a fixed payment component within the payment structure. Otherwise, the service provider would probably not be able to enter into such a transaction, as it would have no guarantee of performance unless the service provider had another source to which it could sell the electricity.