IFRS 15 / ASC 606 Explanatory Example – Base Scenario
Background to our series on IFRS 15 and ASC 606
We think it is best to explain changes to SAP Business ByDesign for IFRS 15 and ASC 606 along illustrative, realistic examples. In this article, you find more background on the companies used in these examples.
An innovative printing machine vendor
Printing Solution Corp is manufacturer of printing machines and accessories, trading with supplies and providing innovative services around printing: maintenance (customer contracts over time), set-up of machines (standardized service) and consulting for construction projects.
As a future-ready company, they are using SAP Business ByDesign. This year, they are applying ASC 606 the first time. Because the sale of a new machine is often bundled with discounted services, they are impacted by the standard, as well as for contracts over time for the maintenance of machines.
A growing customer
A very successful customer is Media Productions Ltd. They run two established large industrial print shop facilities at the east coast and west coast. The shops are running since 10 years and the customers plans to stepwise substitute his existing machines to meet these objectives:
- Gain more throughput
- Gain for more flexibility
- Lower cost per print output
Moreover they are planning to build a brand new print shop in the mid region.
The sales representative of Printing Solutions Corp is aware about the situation at Media Productions Ltd and foresees a good upsell opportunity.
Thomas, sorry, I'm at loss here... How exactly SAP Business ByDesign benefit in this scenario?
What is so "innovative" about selling printers and maintaining them? From what I read, a "future- ready" company is selling machines with some service contracts. They have a customer and they now need their machines replaced. And the company is "aware of the situation"? Errr... Oh-kay, that's how the sale process worked for the last few centuries, I think...
Sorry but I fail to see any valuable information or relevance in this blog. I took the liberty of checking your other blogs on the subject and they seem to be much more detailed. But I'm afraid this one is a flop. Not sure what happened...
P.S. In the SCN blogs, you don't need to inject marketing fluff like "future-ready" into the text. Imagine you're talking to someone and they insert "like, you know" after every other word. Annoying and off-putting, isn't it? Empty buzzwords are the equivalent of that. They're not impressing the reader, it's quite the opposite.
Thank you.
Jelena, this blog just describes the background of a blog series we have issued on enhancements to SAP Business ByDesign to comply with IFRS 15. It is an "embedding story". You may find the entry with this article.