RE:The old CEO shell game....I'm not an expert, but I think IFRS 15 requires the separation out of performance obligations under a contract and assigning the appropriate amount of revenue once each performance obligation has been met. So, for Reliq, once they have transferred ownership of a device to a patient, they have fulfilled their performance obligation, and they should therefore report revenue accordingly and establish the appropriate A/R amount. Payments later received would go towards reducing A/R over time.
As I recall, the CEO mentioned this exact revenue recognition issue in a previous interview, stating that full recognition at the time of hardware sale was required by the auditors.
Just in closing, please note that this applies to hardware sales only, because Reliq's performance obligation has been met once ownership has been transferred (the item delivered). It would not apply to monthly software sales, because those service obligations are only performed each month.
I hope this helps.
ITSUP2ME wrote: The auditors probably found out that the company never amortized their revenues over the life span of the signed contracts...GLTA