Question

For subscriptions to media like magazines and streaming services like Hulu and Netflix where the cost for the service was paid before, from the company's perspective when do they actually earn the money you have already paid?

Answer 1

The revenue pertaining to services, the cost for which is paid in advance, is recognized when the service is rendered or delivered by the company or availed by the customer. Until such time it is recorded as unearned revenue. Thus, for subscriptions to magazines or streaming services, the company will record the cost of the service received in advance as unearned or deferred revenue and will then recognize the service/subscription revenue periodically or when the magazine or streaming service is delivered to the customer.