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Day 23

Liabilities: Deferred Revenue, Debt and Other

Watch the video and scroll down for your homework.

Your Homework

Take a look at TESLA 2022 10-K (or "annual report") and locate their Balance Sheet.

  1. a. What does the liability Deferred Revenue represent?

    b. Why is it listed twice - as one amount under current liabilities and then a separate amount as part of total liabilities?

  2. What are the two remaining subcategories not yet mentioned that are included in current liabilities?

  3. a. What does Tesla label their Debt financing on their balance sheet?  

    b. Why is this category listed twice - as one amount under current liabilities and then a separate amount as part of total liabilities?

Answers

  1. a. This is simply how much money customers have paid Tesla for electric cars that have not yet been delivered by Tesla to customers. So if Tesla sells a whole bunch of cars before they are built and available, Tesla can't recognize revenue until they deliver those cars, even if they already got the cash for it.

    b. The deferred revenue in current liabilities is the amount of revenue associated with the cars Tesla expects to deliver WITHIN ONE year;  The deferred revenue amount as part of total liabilities is the amount of revenue associated with delivery of cars AFTER 1 YEAR (note: Tesla doesn't label "non-current liabilities" but it is implied that any amount not listed under current liabilities but included in total liabilities means it is a "non-current liability").

  2. Customer Deposits (similar to deferred revenue but includes just customer deposits), AND Current Portion of Debt and Finance Leases.

  3. a. Debt and Finance Leases;

    b. One amount is listed as "Current Portion of Debt and Finance Leases" under current liabilities because this is debt that Tesla expects to pay off within one year. The other amount listed as "Debt and Finance Leases, Net of Current Portion" is the portion that will be due in more than a year.

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