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  • December 2018 (Revised August 2022)
  • Teaching Note
  • HBS Case Collection

Revenue Recognition at HBP

By: Siko Sikochi and Paul Healy
  • Format:Print
  • | Language:English
  • | Pages:13
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Abstract

In early 2014, Corporate Learning, one of three business units at Harvard Business Publishing (HBP), was in the process of revamping its flagship product, Harvard Manage-Mentor (HMM) from version 11.0 (HMM11) to version 12.0 (HMM12). The revamped software would be hosted exclusively on HBP’s server, allowing updates to take place continuously. Given the change, accounting standards required HBP to change the recognition of revenue from the date of software delivery (for HMM11) to ratable recognition over its contract life (for HMM12). As Paul Bills (CFO of HBP) and David Wan (HBP’s CEO) discussed the accounting change, they recognized that its impact on Corporate Learning’s and HBP’s performance could be material and would have to be reflected in the budget. In addition, they wondered how the new accounting would affect the company’s policy for awarding sales incentive compensation on HMM, as well as how they communicated with employees and the firm’s sole shareholder, the Harvard Business School.

Keywords

Accrual Accounting; Budgets and Budgeting; Revenue Recognition; Financial Reporting; Publishing Industry; Education Industry; United States

Citation

Sikochi, Siko, and Paul Healy. "Revenue Recognition at HBP." Harvard Business School Teaching Note 119-015, December 2018. (Revised August 2022.)
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About The Authors

Anywhere Sikochi

Accounting and Management
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Paul M. Healy

Accounting and Management
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Related Work

    • December 2018 (Revised August 2022)
    • Faculty Research

    Revenue Recognition at HBP

    By: Siko Sikochi and Paul Healy
Related Work
  • Revenue Recognition at HBP By: Siko Sikochi and Paul Healy
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