Ronny regarding booking the Nokia award when the judge hands down his ruling.
You said:
"Your argument for delaying revenue recognition appears to be centering upon IDCC receiving the appropriate royalty reports from Nokia, and not upon a favorable enforcement ruling. I suppose you are implying that either the royalty amounts are not yet fixed or determinable, or that they are not reasonably certain until Nokia somehow acknowledges the liability
I would argue that the royalty amounts are reasonably determinable, even without the actual royalty reports from Nokia. IDCC has already published expected Nokia royalties in press releases, which were reasonably estimated from industry sources.
I would think that a court ruling on the enforceability of the arbitration ruling would satisfy the reasonable collectability criteria of revenue recognition, even without Nokia's official acknowledgement thereof or possible further efforts to delay by appeal."
I don't believe your reasoning works in practice although in theory you are correct. If it were true, then IDCC, and Qualcomm for that matter, wouldn't have to wait each quarter in order to report revenue from their respective licensees. As you know IDCC and Q have changed their accounting for royalties to delay reporting of quarterly amounts until they have actually received the reports from their licensees which delays revenue by one quarter. If they could rely instead on estimates, they would not have had to do this. In fact the quarterly amounts are not all that much when compared to the Nokia money and I would bet if they estimated the revenue on a quarterly basis, they would be pretty close to the exact number and they choose not to do this. IMO I believe they could easily report estimated revenues then adjust the next quarter by any over/under accrual and disclose such in the footnotes. IDCC (and Q) chooses not to do this.
The amount in question with Nokia is substantial and is subject to significant variances without the actual reports being received, not to mention the remote possibility of Nokia appealing and reversing the arbitration. I have no doubt that IDCC will issue a press release and also include the estimated amount in their footnotes but I would be somewhat surprised to see them accrue it unless Nokia finally gives up its delaying tactics and hands over the reports along with the cash.
All is just my opinion as you have yours and hopefully we wont find out who is right. Hopefully upon the award, Nokia hands over the reports and then a check before the quarter is even over. Then we will never even know who was right on this one.
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