Re:European Union plans to tax tech giants on local revenue
by ucaetano on Monday March 05, 2018 @04:50PM
(#16524787)
They do, and they frequently release the numbers (often calling it non-GAAP).
The issue is that accounting is very complicated. Like really, really complicated. And that's because you're trying to make a lot of very different companies follow the same rules on how to recognize revenue, costs, investments, etc.
For example, here's a real world problem I came across once: how do you recognize the revenue of selling virtual tractors on FarmVille?
- When the sale takes place?
- Over a pre-set period of time, determined by the average lifetime of an user?
- Over a pre-set schedule that follows depreciation schedules of real tractors?
Economic is even more complicated. Economic profit takes in account the cost of opportunity, so a company might have accounting profit but no economic profit. It gets even worse when you're talking about cross-border accounting.
In other words, companies usually have managerial accounting using their own internal rules, and standards-based accounting (GAAP, IFRS, etc.), to report operations to the government and to the owners.
The issue is that accounting is very complicated. Like really, really complicated. And that's because you're trying to make a lot of very different companies follow the same rules on how to recognize revenue, costs, investments, etc.
For example, here's a real world problem I came across once: how do you recognize the revenue of selling virtual tractors on FarmVille?
- When the sale takes place?
- Over a pre-set period of time, determined by the average lifetime of an user?
- Over a pre-set schedule that follows depreciation schedules of real tractors?
Economic is even more complicated. Economic profit takes in account the cost of opportunity, so a company might have accounting profit but no economic profit. It gets even worse when you're talking about cross-border accounting.
In other words, companies usually have managerial accounting using their own internal rules, and standards-based accounting (GAAP, IFRS, etc.), to report operations to the government and to the owners.