Blackberry 2006 Annual Report Download - page 50

Research In Motion Limited
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Research In Motion Limited • Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)
In the event that the fair value of the reporting unit, including goodwill, is less than the carrying value,
the implied fair value of the reporting unit’s goodwill is compared with its carrying amount to measure the
amount of the impairment loss, if any. The implied fair value of goodwill is determined in the same manner
as the value of goodwill is determined in a business combination using the fair value of the reporting
unit as if it were the purchase price. When the carrying amount of the reporting unit goodwill exceeds the
implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess and
is presented as a separate line item in the consolidated statements of operations.
The Company has one reporting unit which is the consolidated Company.
(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 nancial reporting
and tax bases of assets and liabilities and are measured using enacted income 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 income tax assets and whether a valuation allowance is required.
The Company has used the ow-through method to account for investment tax credits earned on eligible
scientic research and development expenditures. Under this method, the investment tax credits are
recognized as a reduction to income tax expense.
(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 xed or
determinable and collectibility is reasonably assured. In addition to this general policy, the following
paragraphs describe the specic revenue recognition policies for each major category of revenue.

Revenue from the sale of BlackBerry devices is recognized when title is transferred to the customer and all
signicant contractual obligations that affect the customer’s nal acceptance have been fullled. 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 Certied Public Accountants Statement of Position 97-2, Software Revenue
Recognition
(“SOP 97-2”).
Provisions are made at the time of sale for applicable warranties, royalties and estimated product returns.
If the historical data the Company uses to estimate product returns does not properly reect future
returns, these estimates could be revised. Future returns, if they were higher than estimated, would result
in a reduction of revenue. To date, returns of devices and other products have been negligible. As a result,
the Company’s accrual with respect to such product returns is not signicant.

Revenue from service 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 prebilling is recorded as
deferred revenue.