Blackberry 2004 Annual Report Download - page 39

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For the years ended February 28, 2004, March 1, 2003 and March 2, 2002
(o) Income taxes
The liability method of tax allocation is used to
account for income taxes. Under this method,
deferred income tax assets and liabilities are
determined based upon differences between the
financial reporting and tax bases of assets and
liabilities, and measured using the substantively
enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
The Company continues to assess, on an on-going
basis, the degree of certainty regarding the
realization of deferred tax assets, and whether a
valuation allowance is required.
(p) Revenue recognition
The Company recognizes revenue when it is realized
or realizable and earned. The Company considers
revenue realized or realizable and earned when it
has persuasive evidence of an arrangement, the
product has been delivered or the services have
been provided to the customer, the sales price is
fixed or determinable and collectibility is reasonably
assured. In addition to this general policy, the
following are the specific revenue recognition
policies for each major category of revenue.
Handheld and other hardware products
Revenue from the sale of hardware, original
equipment manufacturer products (“OEM”) and
accessories are recognized when title is transferred
to the customer and all significant contractual
obligations that affect the customer’s final
acceptance have been fulfilled. Provisions are made
at the time of sale for warranties, royalties and
estimated product returns. For hardware products
for which the software is deemed not to be
incidental, the Company recognizes revenue in
accordance with the American Institute of Certified
Public Accountants Statement of Position 97-2,
Software Revenue Recognition (“SOP 97-2”).
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 license term and in accordance
with SOP 97-2. Revenue from software
maintenance, unspecified 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 specific contract
milestones are met. The attainment of milestones
approximates actual performance.
Shipping and handling costs
Where they can be reasonably attributed to certain
revenue, shipping and handling costs are included
in Cost of sales, otherwise they are included in
Selling, Marketing and Administration.
(q) Research and development
The Company is engaged at all times in research
and development work. Research and development
costs, other than capital asset acquisitions, are
charged as an operating expense of the Company as
incurred.
(r) 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
scientific research and experimental development