How Allowance-Based Revenue Recognition Works

Revenue recognition processing for allowance-based usage is completed sequentially as described below.

• The recurring charge that grants the base allowance is sent for period-based satisfaction and recognized over time.
• Usage consumption is first applied against the available base allowance in the balance register.
• After the base allowance is consumed, usage is applied against any available additional base allowance or top-up allowance.
• The one-time top-up charge is quantity satisfied as the top-up allowance is consumed.
• If unused top-up allowance remains at the end of the balance period, a satisfaction event is sent for the unused quantity so the remaining top-up revenue can be recognized.
• Usage that exceeds the available base allowance, additional base allowance, or top-up allowance is identified as overage.
• Overage is associated with the revenue contract for the allowance-granting performance obligation from which usage was last drawn.
• Overage is sent to RMCS as additional revenue for the same service. It is not created as a separate performance obligation.
• Rollover updates the available allowance balance for future consumption. It doesn’t create revenue contract impact, and rollover duration isn’t sent to RMCS.