Study On Revenue Recognition Of Online Game Companies As A Case Of L Enterprise

In recent years, online game companies in China grow gradually. Sales revenue and the number of users grow rapidly. As a new industry area of the Internet economy, the online game business is different from traditional business. Revenue recognition of online game companies is complex, bringing challenge to the principles and methods of revenue recognition. How to apply the revenue recognition principle is a major problem of online game business accounting.This thesis study on the existing problems of revenue recognition in online game companies as a case of L Enterprise. First of all, analyze the principles and specific processes of revenue recognition under the three models of operating. Secondly, identify problem based on China Accounting Standards, International Financial Reporting Standards and Generally Accepted Accounting Principles. Main problems in L Enterprises are as follows. Recognize revenue of virtual goods without sufficient evidence showing that goods ownership risks and rewards have been transferred to the players. During big sales, revenue recognition is not accurately.Virtual currency unused for a long time and meeting revenue recognition principle is not recognized revenue. For joint-operation-game, the distribution of revenue among principle and agent is not reasonable. Finally, try to use China Accounting Standards, International Financial Reporting Standards and Generally Accepted Accounting Principles solving problems above. Put forward suggestions and solutions based on establishment of application guidelines for revenue recognition of online games companies. The recommendations include: selecting the appropriate recognition mode and recognizing revenue during the period; recognizing revenue of virtual goods during promotion period;recognizing revenue of virtual currency which not used for a long time and meet the revenue recognition criteria; distributing income between principal and agent reasonably.Existing literature of online game companies’ revenue recognition is theoretical analysis and discussion. Most of the study is only one aspect of revenue analysis, lacking integrity and performance. This thesis is based on a specific example discussing the practical application of accounting standards. Then make constructive suggestions with referential meaning.