Reservation payments from customers actually debits cash and credit unearned revenue. Both transact on the balance sheet side. No impact on earnings until the trucks are delivered. I’m a CPA by the way.
UnknownUnicorn266486
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Hi @justinl619, thanks for the comment. Quick question, what if the item is labeled a credit sale rather than a reservation payment? Cheers Justin
justinl619
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@MERCmethod, Then you debit (increase) Account Receivable, only when sales is finalized. Sales can't be finalized until the product is delivered to the customer. Even on the customer's balance sheet, it would be prepaid (asset on balance sheet) and credit to (decrease) cash. Expense is not recognized on customer side until the truck is delivered to him/her.
Correct me if I am wrong, last quarter's performance was driven by the partial revenue recognition of the FSA. They released the Smart Summon on Sept 26th (days before the end of the quarter) and recognized the revenue related to it which the customers prepaid for.
Regarding performance, October 2nd TSLA released an 8K (link is below) with a new off-balance sheet credit facility by “Tesla Beijing”. As far as I can tell its not a wholly-owned subsidiary. About a week or so prior there was that internal email "leaked suggesting "TSLA has a shot at delivering 100,000 cars this quarter". I think this had a lot to do with the performance.
I have more questions than answers about TSLA which always keeps me from placing a trade.
justinl619
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@MERCmethod yes, higher risk than reward at this point. Maybe I will trade it after the grand super cycle correction.