|SEVEN STARS CLOUD GROUP, INC. filed this Form 8-K/A on 08/14/2017|
Wecast Services Group Limited
December 31, 2015 and December 31, 2016
Note 1 - Operations and significant accounting policies (continued)
Revenue is recognized when the following criteria under FASB ASC 605 “Revenue Recognition” are met:
Revenue is measured at the fair value of the consideration received or receivable and is shown net of discounts, rebates, returns and sales-related taxes. Revenue is recognized in profit or loss provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, as follows:
For goods sale, the Group’s revenues are recognized when goods are received and accepted by customers.
Consultancy fee income is recognized when the services have been rendered.
The Group generates revenue mainly from sales of goods. The Group purchases skateboards from its suppliers and sells them through e-commence platforms, like Amazon, eBay. After receiving the skateboards, the Group becomes the first responsible party for the goods. The Group is required to bear the direct risk of damage to the goods and the direct default risk that cannot be delivered to the customer.
In accordance with ASC 605-45, Revenue Recognition – Principal Agent Consideration, the Group accounts for revenue from sales of goods on a gross basis. The Group is the primary obligor in the arrangements, the Group has the ability to establish prices, the Group has discretion in selecting the independent suppliers, and the Group bears credit risk with customer payments. Accordingly, all such revenue billed to customers is classified as revenue and all corresponding payments to suppliers are classified as cost.