Revenue Recognition Memo
By: lilobmaggie • May 2, 2019 • Course Note • 310 Words (2 Pages) • 897 Views
To:
Christian Wolff, Audit Engagement Partner
From:
Date:
Re:
Spider-Web Corporation
Background:
Spider-Web Corporation is a nonpublic U.S based company, known for being successful in the advertising industry. Earning the majority of its money through advertising, Spider- Web, owns and operates the well known Web sites: YourSpace (public video streaming), and Bling (search engine).
Spider-Web receives revenue the following ways:
• Placing advertisements for companies on Spider-Web owned websites, partner websites, and or third party websites
• Fees are charged to the advertiser from Spider-Web, depending on what time of advertising service performed
Important factors to keep in consideration:
• Spider-Web has contracts to uphold with partners:
o Partners charge fees to Spider for use of their Web site ad spaces
o “The fee structure allows the partners to receive a minimum base fee that is equal to the cost to maintain the ad space (as predetermined on a quarterly basis) and up to 51 percent of the adjusted gross advertising revenue earned monthly”
o “adjusted gross advertising revenue is equal to the amounts invoiced to the advertiser less chargebacks, credits, bad debt, refunds, and certain out-of-pocket expenses, including agency commissions and fees, sales commissions and fees,
...