Blackberry 2003 Annual Report Download - page 34

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Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
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For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
Service฀Revenue฀is฀recognized฀rateably฀on฀a฀monthly฀basis฀when฀the฀service฀is฀provided.฀In฀instances฀
where฀the฀Company฀bills฀the฀customer฀prior฀to฀performing฀the฀service,฀the฀prepayment฀is฀recorded฀
as฀deferred฀revenue.
Software฀Revenue฀from฀licensed฀software฀is฀recognized฀at฀the฀inception฀of฀the฀licence฀term฀and฀in฀
accordance฀with฀SOP฀97-2.฀Revenue฀from฀software฀maintenance,฀unspecied฀upgrades฀and฀technical฀
support฀contracts฀is฀recognized฀over฀the฀period฀such฀items฀are฀delivered฀or฀services฀are฀provided.฀
Technical฀support฀contracts฀extending฀beyond฀the฀current฀period฀are฀recorded฀as฀deferred฀revenue.
Non-recurring฀engineering฀contracts฀Revenue฀is฀recognized฀as฀specic฀contract฀milestones฀are฀met.฀
The฀attainment฀of฀milestones฀approximates฀actual฀performance.
(o)฀Research฀and฀development฀–฀The฀Company฀is฀engaged฀at฀all฀times฀in฀research฀and฀develop-
ment฀work.฀Research฀and฀development฀costs,฀other฀than฀capital฀asset฀acquisitions,฀are฀charged฀as฀an฀
operating฀expense฀of฀the฀Company฀as฀incurred,฀unless฀they฀meet฀generally฀accepted฀accounting฀
principles฀for฀deferral.฀
(p)฀Government฀assistance฀–฀Government฀assistance฀towards฀research฀and฀development฀expenditures฀
is฀received฀as฀grants฀from฀Technology฀Partnerships฀Canada฀and฀in฀the฀form฀of฀investment฀tax฀credits฀
on฀account฀of฀eligible฀scientic฀research฀and฀experimental฀development฀expenditures.฀Investment฀tax฀
credits฀are฀recorded฀when฀there฀is฀reasonable฀assurance฀that฀the฀Company฀will฀realize฀the฀investment฀
tax฀credits.฀Assistance฀related฀to฀the฀acquisition฀of฀capital฀assets฀used฀for฀research฀and฀development฀
is฀credited฀against฀the฀cost฀of฀the฀related฀capital฀assets฀and฀all฀other฀assistance฀is฀credited฀against฀
related฀expenses,฀as฀incurred.
(q)฀Loss฀per฀share฀–฀Loss฀per฀share฀is฀calculated฀based฀on฀the฀weighted฀average฀number฀of฀shares฀
outstanding฀during฀the฀year.฀The฀treasury฀stock฀method฀is฀used฀for฀the฀calculation฀of฀the฀dilutive฀
effect฀of฀stock฀options฀and฀common฀share฀purchase฀warrants.฀
(r)฀Stock-based฀compensation฀plan฀–฀The฀Company฀has฀a฀stock-based฀compensation฀plan,฀which฀
is฀described฀in฀note฀10(b).฀The฀options฀are฀granted฀at฀the฀fair฀market฀value฀of฀the฀shares฀on฀the฀
day฀of฀grant฀of฀the฀options.฀No฀compensation฀expense฀is฀recognized฀when฀stock฀options฀are฀issued฀
to฀employees.฀Any฀consideration฀paid฀by฀employees฀on฀exercise฀of฀stock฀options฀is฀credited฀
to฀share฀capital.
In฀November฀2001,฀the฀CICA฀issued฀Handbook฀Section฀3870,฀Stock฀Based฀Compensation฀and฀Other฀
Stock฀Based฀Payments.฀This฀standard฀requires฀that฀certain฀types฀of฀stock-based฀compensation฀
arrangements฀be฀accounted฀for฀at฀fair฀value,฀giving฀rise฀to฀compensation฀expense,฀for฀grants฀awarded฀
in฀scal฀years฀beginning฀on฀or฀after฀January฀1,฀2002.฀The฀Company฀adopted฀this฀standard฀in฀scal฀2003฀
with฀no฀impact฀to฀retained฀earnings.
(s)฀Warranty฀–฀The฀Company฀estimates฀its฀warranty฀costs฀at฀the฀time฀of฀revenue฀recognition฀based฀
on฀historical฀warranty฀claims฀experience฀and฀records฀the฀expense฀in฀Cost฀of฀sales.฀The฀warranty฀accrual฀
balance฀is฀reviewed฀quarterly฀to฀assess฀that฀it฀materially฀reects฀the฀remaining฀obligation฀based฀on฀
the฀anticipated฀future฀expenditures฀over฀the฀balance฀of฀the฀obligation฀period.฀Adjustments฀are฀made฀
when฀the฀actual฀warranty฀claim฀experience฀differs฀from฀estimates.
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