Carnival Cruises 2014 Annual Report Download - page 16

Revenue and Expense Recognition
Guest cruise deposits represent unearned revenues and are initially included in customer deposit liabilities when
received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from
onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise
costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for
voyages in excess of ten nights. The impact of recognizing these shorter duration cruise revenues and costs and
expenses on a completed voyage basis versus on a pro rata basis is not significant. Future travel discount
vouchers issued to guests are included as a reduction of cruise passenger ticket revenues when such vouchers are
utilized. Guest cancellation fees are recognized in cruise passenger ticket revenues at the time of the cancellation.
Our sale to guests of air and other transportation to and from airports near the home ports of our ships and the
related cost of purchasing these services are included in cruise passenger ticket revenues and cruise
transportation costs, respectively. The proceeds that we collect from the sales of third-party shore excursions and
on behalf of our onboard concessionaires, net of the amounts remitted to them, are included in onboard and other
cruise revenues as concession revenues. All of these amounts are recognized on a completed voyage or pro rata
basis as discussed above.
Cruise passenger ticket revenues include fees, taxes and charges collected by us from our guests. A portion of
these fees, taxes and charges vary with guest head counts and are directly imposed on a revenue-producing
arrangement. This portion of the fees, taxes and charges is expensed in commissions, transportation and other
costs when the corresponding revenues are recognized. These fees, taxes and charges included in passenger ticket
revenues and commissions, transportation and other costs were $532 million, $517 million and $477 million in
2014, 2013 and 2012, respectively. The remaining portion of fees, taxes and charges are also included in cruise
passenger ticket revenues but are expensed in other ship operating expenses when the corresponding revenues are
recognized.
Revenues and expenses from our hotel and transportation operations, which are included in our Tour and Other
segment, are recognized at the time the services are performed or expenses are incurred. Revenues from the long-
term leasing of ships, which are also included in our Tour and Other segment, are recognized ratably over the
term of the charter agreement using the straight-line method (see Note 11).
Insurance
We maintain insurance to cover a number of risks including illness and injury to crew, guest injuries, pollution,
other third-party claims in connection with our cruise activities, damages to hull and machinery for each of our
ships, war risks, workers’ compensation, employee health, directors and officers liability, property damages and
general liabilities for third-party claims. We recognize insurance recoverables from third-party insurers for
incurred expenses at the time the recovery is probable and upon realization for amounts in excess of incurred
expenses. All of our insurance policies are subject to coverage limits, exclusions and deductible levels. The
liabilities associated with crew illnesses and crew and guest injury claims, including all legal costs, are estimated
based on the specific merits of the individual claims or actuarially estimated based on historical claims
experience, loss development factors and other assumptions. While we believe our estimated accrued claims
reserves are adequate, the ultimate losses will differ.
At November 30, 2014 and 2013, substantially all of our aggregated short-term and long-term insurance
recoverables are for crew, guest and other third-party claims related to the January 2012 ship incident. At
November 30, 2014 and 2013, the majority of our aggregated short-term and long-term claims reserves also
relate to this January 2012 ship incident. At November 30, 2014 and 2013, our long-term insurance recoverables
and long-term claims reserve are included in other assets and other long-term liabilities, respectively, and are not
material.
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