You stated well, but may I expand on your points?
Post# of 96874
1.
Quote:
NTEK can spend the 20.00 that is theirs right away because sale is final.
NTEK can use the $20 cash, but, it isn't income until the movies are viewed and a liability also exists until the movies are viewed.
2.
Quote:
NTEK has to protect and shelter the 80.00 owed to Provider and must pay to provider related to the movie at the time the movie is viewed
Exactly what happens here is subject to the contracts with the content providers. This is not known to us.
3.
Quote:
NTEK for income statement purposes may be required to recognize the income over the time period the movies are viewed.
You are correct.
4.
Quote:
NTEK may be able to take into income all balance of unused moneys after a significant time period expires allowing NTEK to claim that the account is cold and investment forgot.
You are going to love this one. Because these sales were in California, the State says that if the movies are not watched for a specific period of time, then the company must turn the unused portion over to the State. The State gets to keep the money until the original buyer files a claim to recover the funds. Don't you just love it. California (and all other states) say give us your money, you can trust us. I don't know the exact requirements for remitting the money to California, but it will require NTEK to keep extensive records. Ugh!