Module I· Revenue Recognition (IFRS 15)Intermediate
Question
What is deferred revenue / contract liability, and how does it affect valuation?
Answer
Deferred revenue is cash received before performance. It becomes revenue only as the company satisfies the performance obligation.
Deep diveShow more details
For valuation, focus on the cost to fulfill and normalized working-capital level. A large abnormal balance may require a debt-like or working-capital adjustment.