Tucows 2015 Annual Report Download - page 184

The Company derives revenues from the provisioning of mobile phone and fixed Internet access services
primarily through its Ting website. These revenues are recognized once services have been provided. Revenues for
wireless services are billed based on the actual amount of monthly services utilized by each customer during their billing
cycle on a postpaid basis. The Company’s billing cycle for each customer is computed based on the customer’s activation
date. As a result, the Company estimates the amount of revenues earned but not billed from the end of each billing cycle to
the end of each reporting period. In addition, revenues associated with the sale of wireless devices and accessories to
subscribers is recognized when title and risk of loss is transferred to the subscriber and shipment has occurred. Incentive
marketing credits given to customers are recorded as a reduction of revenue.
The Company also generates advertising and other revenue through its online libraries of shareware, freeware
and online services presented on its website. Advertising revenue includes revenue derived from cost-per action
advertising links we display on third party websites who provide syndicated pay-per-click advertising on OpenSRS
Domain Expiry Stream domains and the Company’s Portfolio Domains. In addition, the Company uses third party
partners to derive pay-per-click advertising on the Tucows.com website. Advertising revenue is recognized on a
monthly basis based on the number of cost-per-action services that were provided in the month.
Impression based advertising revenue and other revenues are recognized ratably over the period in which it is
presented. To the extent that minimum guaranteed impressions are not met, the Company defers recognition of the
corresponding revenues until the guaranteed impressions are achieved.
In those cases where payment is not received at the time of sale, additional conditions for recognition of revenue
are that the collection of the related accounts receivable is reasonably assured and the Company has no further
performance obligations. The Company records costs that reflect expected refunds, rebates and credit card charge-backs as
a reduction of revenues at the time of the sale based on historical experiences and current expectations.
The Company establishes provisions for possible uncollectible accounts receivable and other contingent liabilities
which may arise in the normal course of business. Historically, credit losses have been within the Company’s expectations
and the provisions the Company has established have been appropriate. However, the Company has, on occasion,
experienced issues which have led to accounts receivable not being fully collected. Should these issues occur more
frequently, additional provisions may be required.
(i) Deferred revenue
Deferred revenue primarily relates to the unearned portion of revenues received in advance related to the
unexpired term of registration fees from domain name registrations and other Internet services, on both a wholesale and
retail basis, net of external commissions.
(j) Accreditation fees payable
In accordance with ICANN rules, the Company has elected to pay ICANN fees incurred on the registration of
Generic Top-Level Domains on an annual basis. Accordingly, accreditation fees that relate to registrations completed prior
to ICANN rendering a bill are accrued and reflected as accreditation fees payable.
(k) Prepaid domain name registry fees
Prepaid domain name registry and other Internet services fees represent amounts paid to registries, and country
code domain name operators for updating and maintaining the registries, as well as to suppliers of other Internet services.
Domain name registry and other Internet services fees are recognized on a straight-line basis over the life of the contracted
registration term.
(l) Translation of foreign currency transactions
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