I’m not an expert in accounting rules but that strikes me as at least a bit questionable.
Groupon was able to count the entire purchase price of the coupon as revenue because it considered itself the “primary obligor” in the coupon purchases. This struck me—and many others—as a bit of a stretch. Weren’t the companies that provided the services the primary obligors?
Facebook is the anti-Groupon when it comes to accounting for its payment network. When a user purchases a credit, Facebook doesn’t recognize any revenue at all. It considers the funds used to buy the credit as a “deposit.” Revenue is only recognized when the credit is cashed in for a virtual good. And even then, Facebook only includes the amount it gets to keep after the company selling the virtual good gets its share.
That produces a good clean number on the revenue line. And it speaks well for Facebook’s desire to be upfront with investors about its earnings.
Follow John on Twitter. (Market and financial news, adventures in New York City, plus whatever is on his mind.) You can email him at firstname.lastname@example.org.
We also have two NetNet Twitter feeds. Follow CNBCnetnet for the best of the days posts, including breaking news. Follow NetNetDigest for a feed of every single post each day.
You can also be our friend on Facebook. Or subscribe to John's Facebook page.
We're on Google Plus too! Click here and add NetNet to your circles. And here is John's Google+ page.
Questions? Comments? Tips? Email us atNetNet@cnbc.comor send a text message to: 9170740-8477.
Call us at 201-735-4638.