P5-56. Analyzing and Interpreting Income Disclosures Sales information for Tesla Inc. follows. Year Ended December 31...

Transcribed Image Text:

P5-56. Analyzing and Interpreting Income Disclosures Sales information for Tesla Inc. follows. Year Ended December 31 ($ thousands) Automotive sales Automotive leasing. Total automotive revenues. Services and other. Total automotive & services and other segment revenue Energy generation and storage segment revenue Total revenues 2018 2017 $17,631,522 $8,534,752 883,461 1,106,548 18,514,983 9,641,300 1,391,041 1,001,185 19,906,024 10,642,485 2016 $5,589,007 761,759 6,350,766 467,972 6,818,738 1,555,244 1,116,266 181,394 $21,461,268 $11,758,751 $7,000,132 Automotive sales revenue includes revenues related to sale of new Model S, Model X and Model 3 vehicles, including access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates. Automotive leasing revenue includes the amortization of revenue for Model S and Model X vehicles under direct lease agreements as well as those sold with resale value guarantees accounted for as operating leases under lease accounting. We do not yet offer leasing for Model 3 vehicles. Services and other revenue consists of non-warranty after-sales vehicle services, sales of used ve- hicles, sales of electric vehicle components and systems to other manufacturers, retail merchandise, and sales by our acquired subsidiaries to third party customers. Energy generation and storage revenues consists of the sale of solar energy systems and energy storage systems to residential, small commercial, and large commercial and utility grade customers. ers Required a. Tesla reports several sources of revenue. How should revenue be recognized for each of these business activities? Explain. b. Compute the relative size of sales revenue from the four types of revenue Tesla discloses. (Hint: Scale each type of revenue by total revenue.) What observations can be made about the different sources of revenue? c. Compute the growth in sales revenue for both years from each of the four types of revenue. What do we observe? P5-56. Analyzing and Interpreting Income Disclosures Sales information for Tesla Inc. follows. Year Ended December 31 ($ thousands) Automotive sales Automotive leasing. Total automotive revenues. Services and other. Total automotive & services and other segment revenue Energy generation and storage segment revenue Total revenues 2018 2017 $17,631,522 $8,534,752 883,461 1,106,548 18,514,983 9,641,300 1,391,041 1,001,185 19,906,024 10,642,485 2016 $5,589,007 761,759 6,350,766 467,972 6,818,738 1,555,244 1,116,266 181,394 $21,461,268 $11,758,751 $7,000,132 Automotive sales revenue includes revenues related to sale of new Model S, Model X and Model 3 vehicles, including access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates. Automotive leasing revenue includes the amortization of revenue for Model S and Model X vehicles under direct lease agreements as well as those sold with resale value guarantees accounted for as operating leases under lease accounting. We do not yet offer leasing for Model 3 vehicles. Services and other revenue consists of non-warranty after-sales vehicle services, sales of used ve- hicles, sales of electric vehicle components and systems to other manufacturers, retail merchandise, and sales by our acquired subsidiaries to third party customers. Energy generation and storage revenues consists of the sale of solar energy systems and energy storage systems to residential, small commercial, and large commercial and utility grade customers. ers Required a. Tesla reports several sources of revenue. How should revenue be recognized for each of these business activities? Explain. b. Compute the relative size of sales revenue from the four types of revenue Tesla discloses. (Hint: Scale each type of revenue by total revenue.) What observations can be made about the different sources of revenue? c. Compute the growth in sales revenue for both years from each of the four types of revenue. What do we observe?

Answer rating: 100% (QA)

a Revenue recognition for Teslas business activities should follow the criteria established by the Financial Accounting Standards Board FASB in the Ac... View the full answer