Jim re accounting for Fuji and Arima differences
The revenue recognition on the new Fuji license will involve an allocation between past sales (nonrecurring) and current quarter royalties (recurring) in Q2 2014. Fuji's unit sales for Q1 2014 should be the basis for IDCC's recognizing current quarter royalties in Q2, ie the one quarter lag on per-unit licenses. The remainder of the the agreement settlement amount would probably be accounted as past sales revenue. Perhaps IDCC had not received Fuji's sales report for Q1 ending on March 31 by May 1, the date of the press release, and could therefore not make the determination between past sales and current quarter royalty at that point in time. IDCC should probably have this report in-hand before they make Q2 revenue guidance.
One side note: this allocation problem between past sales and current quarter royalties usually does not exist with new fixed-fee licenses. Usually IDCC will just recognize the fixed amount over the current quarter and future quarters based upon the number of quarters of the fixed agreement. For example the fixed-fee LG and Samsung licenses, which have now expired, had no past sales amount allocated to them, but the more recent Sony fixed-fee license did have past sales allocated to it. However, this accounting treatment can't be done with a new per-unit license with settlement amounts, since current quarter royalties must match with the unit sales of the previous quarter only.
As far as Arima's revenue recognition: since this was an arbitration award, the settlement amount, excluding interest and legal costs, will probably be allocated to past sales. Arbitration award amounts almost exclusively are based upon past sales of the licensee. IDCC's statement about fixed, determinable, and collectibility being reasonably assured is a general revenue recognition principle. I suppose Arima could balk at paying the arbitration settlement amount, in which case, IDCC might have to get an arbitration confirmation ruling before they are assured of collectibility.
Hope this helps some.
