Replies to post #73675 on Quantum Materials Corp. (fka QTMM)

[jefra1965]

Yes, $500,000 has been received. The second $500,000 has been billed but not received. Nothing has been recorded as revenue as of the date of the Q.

Here we agree.

On the operating section of the cash flow statement, an increase in a current liability increases cash this is why the $1,000,000 deferred revenue shows up as a positive number. On the other hand, an increase in a current asset decreases cash. In this case, it's an increase in AR representing the unpaid $500,000. That's why it shows up as a negative.

Here we are saying the same thing BUT the $500 in AR was the first received payment that has NOT been recognized yet as revenue and not the second $500K.
Put it this way.
Revenue recognized = 0
Account Rec. = $500,000 (An asset)
Deferred revenue = $1,000,000(A liability NOT an asset)
___________________________________
Total = $500,000 (Pending)
Revenue = 0 (Still)

Once the second $500,000 is received, AR will go down, and cash will go up by that amount. Deferred revenue won't change unless they start recognizing it as revenue. When that happens, DR goes down and revenue, and thus Net Income, goes up which passes through to the balance sheet as an increase in equity offsetting the decrease in DR.

The current $500K in AR is the first payment awaiting the second for recognition.

"When that happens, DR goes down and revenue" = ??? Can't understand what you are implying here.

You need to take into account REVENUE in your reasoning. Start from Q2 AR and Revenue and show us where the first $500K went. Where is it??

And remember that the TOTAL value of the License Fee is $1,000,000.