France Télécom (2010)
CONSOLIDATED FINANCIAL STATEMENTS [extract]
NOTE 2 Accounting policies [extract]
2.8 Revenues [extract]
Separable components of bundled offers
Numerous service offers on the Group” main markets include two components: an equipment component (e.g. a mobile handset) and a service component (e.g. a talk plan).
For the sale of multiple products or services, the Group evaluates all deliverables in the arrangement to determine whether they represent separate units of accounting. A delivered item is considered a separate unit of accounting if
(i) it has value to the customer on a standalone basis and
(ii) there is objective and reliable evidence of the fair value of the undelivered item(s).
The total fixed or determinable amount of the arrangement is allocated to the separate units of accounting based on its relative fair value. However, when an amount allocated to a delivered item is contingent upon the delivery of additional items or meeting specified performance conditions, the amount allocated to that delivered item is limited to the non contingent amount. The case arises in the mobile business for sales of bundled offers including a handset and a telecommunications service contract. The handset is considered to have value on a standalone basis to the customer, and there is objective and reliable evidence of fair value for the telecommunications service to be delivered. As the amount allocable to the handset generally exceeds the amount received from the customer at the date the handset is delivered, revenue recognized for the handset sale is generally limited to the amount of the arrangement that is not contingent upon the rendering of telecommunication services, i.e. the amount paid by the customer for the handset.