Financial Accounting Blog

Tuesday, February 24, 2004

Priceline's Revenue Recognition policy. Priceline recognizes the selling price of
its ticket sales as revenue, not the commission on the sale. Here is an excerpt
from their 2002 annual report (page 6 of the PDF file):

For the year ended December 31, 2002, we had revenues of approximately
$1.0 billion. Revenues for the year ended December 31, 2002 consisted primarily
of: (1) travel revenue and (2) other revenue. Travel revenue, which represented
substantially all of our total revenue in 2002, consisted primarily of:
(1) transaction revenues representing the selling price of airline tickets, hotel
rooms and rental cars;
(2) ancillary fees, including Worldspan, L.P. reservation
booking fees; and (3) customer processing fees charged in connection with the
sale of our travel products. Other revenues consisted primarily of: (1)
transaction revenues and fees from our long distance phone service; (2)
commissions and fees from our home financing and automobile services; (3)
license fees from our international licensees; and (4) marketing revenues.