Other Threads:

Moneyhatting – CASH - http://www.vgchartz.com/forum/thread.php?id=37195&start=0

Moneyhatting – Payment of Costs - http://www.vgchartz.com/forum/thread.php?id=37227&start=0

As always, please let me know if you have any comments or suggestions.  Thank you for reading.

Loan

The effect of a direct loan to a developer is as follows:

For MSFT, it would show up on the balance sheet as an Asset.  As well, the interest payments should be reflected in their interest income.

If it is a non-interest bearing loan, then it is fairly similar to a direct cash payment.

For EA, the loan will show up on the balance sheet as a Liability.  As well, the interest payments will show up in their expenses, lowering their income.

This type of moneyhatting also distorts financial statements on both sides.  Therefore, I don’t see this as very common as well.

For the GTA4 exclusive content for MSFT, I am not sure when that was announced.  If anybody has a source and link, maybe we can see it in MSFT’s financial statements.

I don't know if the actual $50 million in deferred revenue was part of any actual announcement. The first reference I can remember came from a Take Two conference call stating they are to receive two sets of $25 million.

The first $25 million was supposed to have been received last year for DLC that supposed to be released in March 08. The second $25 million was to be deposited in the latter half of 2008 for the second batch of episodic content.

I don't know how that all played out since GTAIV was delayed after that conference call took place.


Hey, found a link. I was pretty much spot on about it.
http://www.xbox360fanboy.com/2007/06/18/did-microsoft-pay-50-million-for-gta-iv-content/

@ Viper1

$25 million is an asset. Until Take2 recognizes/sells content to MSFT, it will be treated as such.

When content is sold, then it can be treated as revenue.

Which is why it's listed as deferred revenue. It's credit income held over until circumstances are met.

Yup. Deferred revenue normally does not show up on the income statement, just in the balance sheet.

Think of it as a GIFT card. Money is received by retailer (game company), but it is not revenue as they have not sold anything yet.

It is only revenue, when it is redeemed by the customer.

However, the retailer (game company) now owes the amount on the GIFT card, hence it is a liability.

Though they also did received CASH for it, and therefore, it also shows up on the ASSETS of the company.