Make A List Of The Sources Of Revenue That Walt Disney Discl
Make A List Of The Sources Of Revenue That Walt Disney Discloses In It
Make a list of the sources of revenue that Walt Disney discloses in its 10k, based on the excerpt from its k. Which of the listed revenue sources would you expect that Walt Disney could recognize immediately upon sale of product or service? When does cash change hands with accrued revenue? Which of the listed revenue sources would you expect that Walt Disney would need to accrue for? When does cash change hands with unearned revenue? Which of the listed revenues sources would you expect that Walt Disney would initially account for as “unearned revenue”?
Paper For Above instruction
The Walt Disney Company, as a leading multinational entertainment conglomerate, discloses various sources of revenue in its annual 10-K filings, reflecting the diverse nature of its business operations. Understanding these revenue streams is critical for comprehending how Disney recognizes income in accordance with accounting standards such as GAAP and IFRS. The primary sources of Disney’s revenue include media networks, parks and resorts, studio entertainment, consumer products, and interactive media. Each of these segments contributes uniquely to the company's overall revenue and has specific revenue recognition principles based on the timing of the transfer of goods or services, cash collection, and contractual terms.
One of the major revenue sources disclosed by Disney is from media networks, which encompasses revenue generated from advertising, licensing, and affiliate fees. For instance, advertising revenue is recognized over the period in which the advertisement is broadcasted, aligning with the performance obligation's fulfillment. License fees from cable and streaming services are typically recognized when the licensing period occurs, and the revenue is earned.
The parks and resorts segment constitutes revenue from ticket sales, resort bookings, food and beverage services, merchandise sales, and other on-site services. Ticket sales, particularly those for same-day admissions, are usually recognized immediately upon entry, as the performance obligation is fulfilled at that point. Cash changes hands either at the time of ticket purchase or upon check-in for reservations, depending on the sales method used.
Studio entertainment revenues derive from the licensing and sale of films, music, and related products. Revenue from such licensing agreements generally is recognized when the product is delivered or the service is performed, and the customer accepts the delivery. Revenue from film distribution rights is recognized at the point in time when the film is released and customer rights are transferred.
Consumer Products segment, which includes merchandise licensing and sales, recognizes revenue typically when the product is sold to the end consumer—either upon delivery or when title and risk transfer. For license agreements, revenue recognition depends on the terms—sometimes, revenue is recognized over the licensing period, other times upon shipment or delivery.
Interactive media, including mobile and online games, recognizes revenue based on the delivery of the product and the completion of performance obligations, aligning with delivery dates and user access.
In terms of revenue recognition timing, Walt Disney could recognize revenue immediately upon sale in scenarios like ticket sales and merchandise sold at the point of sale. These are situations where the performance obligation is satisfied instantly with the transfer of the product or service, and cash is collected at that point. Cash is recognized as changed hands concurrently or shortly after the performance obligation is fulfilled.
Conversely, Disney needs to accrue revenue when cash has been received but the performance obligation has not yet been fulfilled, such as in the case of certain licensing agreements or subscription-based services where revenue is recognized over the period of service. For such instances, Disney records deferred revenue or unearned revenue initially, which is a liability on the balance sheet, until the revenue recognition criteria are met.
Unearned revenue pertains primarily to cases where Disney receives payment before delivering the corresponding product or service. For example, advance ticket sales for future park admissions or pre-orders for merchandise are initially recorded as unearned revenue. As the performance obligation is fulfilled over time—such as the date of park visit or delivery of ordered merchandise—Disney recognizes this as earned revenue in its income statement.
In conclusion, Walt Disney discloses multiple revenue sources reflecting its diversified operations. Key to compliance with revenue recognition standards is understanding when cash changes hands, when performance obligations are satisfied, and whether revenue should be recognized immediately or accrued as unearned. Proper application of these principles ensures accurate financial reporting and reflects the company's economic activities accurately.
References
- Disney, Walt. (2022). 10-K Annual Report. U.S. Securities and Exchange Commission.
- FASB. (2014). Accounting Standards Update No. 2014-09: Revenue from Contracts with Customers (Topic 606).
- International Accounting Standards Board. (2014). IFRS 15 Revenue from Contracts with Customers.
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