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Revenue vs. NRE (contra R&D)

Lynette Luong's Profile

revenue vs nreWhat are the criterias used to define if the money comming from customer is revenue or NRE for a semiconductor company?

Answers

Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |

Ngoc;

NRE charged to a customer *is* revenue. Typically you won't take this as contra-R&D unless there is something funky going on, such as you've seconded your staff to that company and the staff is getting paid by them.

You will likely want to separate the NRE from the Semiconductor sales for reporting purposes...makes things clearer. However, if you enter a contract to do NRE work then sell the resulting work product to the customer, you will have to allocate that revenue properly which could result in deferred revenue.

Lynette Luong
Title: Accountant
Company: Self
(Accountant, Self) |

Thank you!
Ngoc

Anonymous
(VP of Finance) |

Anybody know how to account for NRE in software business.

If NRE is treated as revenue, is it license/product revenue or service revenue?

Robert Honeyman
Title: CFO
Company: Advanced Predictive Analytics
(CFO, Advanced Predictive Analytics) |

I know this is way old, but I'm just now looking for revenue accounting for NRE. My best guess is NRE is treated as a product: when it's delivered and accepted for the contracted price, it gets treated as immediate revenue. The answer would really depend on the contract. And if there's an element of ongoing maintenance built into the price of the NRE, you would have to separate that out and recognized that piece ratably.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Nice to see you Robert...

Wayne

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