Blackberry 2010 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2010 Blackberry annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 98

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98

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 collectability is reasonably assured. In
addition to this general policy, the following paragraphs describe the specific revenue recognition policies for each major
category of revenue.
Devices
Revenue from the sales of BlackBerry devices is recognized when title is transferred to the customer and all significant
contractual obligations that affect the customer’s final acceptance have been fulfilled. For hardware products for which
software is deemed not to be incidental, the Company recognizes revenue in accordance with industry specific software
revenue recognition guidance. The Company records reductions to revenue for estimated commitments related to price
protection and for customer incentive programs, including reseller and end-user rebates. The estimated cost of the
incentive programs are accrued based on historical experience, as a reduction to revenue in the period the Company has
sold the product and committed to a plan. Price protection is accrued as a reduction to revenue based on estimates of
future price reductions and certain agreed customer inventories at the date of the price adjustment. In addition, provisions
are made at the time of sale for warranties and royalties. For further discussion on warranties see note 13.
Service
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.
Software
Revenue from licensed software is recognized at the inception of the license term and in accordance with industry specific
software revenue recognition guidance.When the fair value of a delivered element has not been established, the Company
uses the residual method to recognize revenue if the fair value of undelivered elements is determinable. Revenue from
software maintenance, unspecified upgrades and technical support contracts is recognized over the period that such items
are delivered or that services are provided.
Other
Revenue from the sale of accessories is recognized when title is transferred to the customer and all significant contractual
obligations that affect the customer’s final acceptance have been fulfilled. Technical support (“T-Support”) contracts
extending beyond the current period are recorded as deferred revenue. Revenue from repair and maintenance programs
is recognized when the service is delivered which is when the title is transferred to the customer and all significant
contractual obligations that affect the customer’s final acceptance have been fulfilled. Revenue for non-recurring
engineering contracts is recognized as specific contract milestones are met. The attainment of milestones approximates
actual performance.
Shipping and handling costs
Shipping and handling costs charged to income are included in cost of sales where they can be reasonably attributed to
certain revenue; otherwise they are included in selling, marketing and administration.
Multiple-element arrangements
The Company enters into transactions that represent multiple-element arrangements which may include any combination
of hardware and/or service or software and T-Support. These multiple-element arrangements are assessed to determine
whether they can be separated into more than one unit of accounting or element for the purpose of revenue recognition.
When the appropriate criteria for separating revenue into more than one unit of accounting is met and there is vendor
specific objective evidence of fair value for all units of accounting or elements in an arrangement, the arrangement
consideration is allocated to the separate units of accounting or elements based on each unit’s relative fair value. When
the fair value of a delivered element has not been established, the Company uses the residual method to recognize
revenue if the fair value of undelivered elements is determinable. This vendor specific objective evidence of fair value is
established through prices charged for each revenue element when that element is sold separately. The revenue
recognition policies described above are then applied to each unit of accounting.
NOTE 1
62
RESEARCH IN MOTION LIMITED
Notes to the Consolidated Financial Statements continued
In thousands of United States dollars, except share and per share data, and except as otherwise indicated