Research On Revenue Recognition Of Online Game Companies Based On New Revenue Standards As A Case Of Perfect World Games

The speeding development of Internet technology in recent years enabled the digital game industry in China to gain a rapid expansion and become one of the greatest symbols in the age of the Internet.However,according to China Securities Regulatory Commission,many game companies have trouble recognizing their avenue appropriately.In their report,it pointed out several times that the timing of revenue recognition in game industry is inconsequent and that accounting policies for revenue recognition in certain game companies are defective.In addition,the Ministry of Finance released a new version of revenue guideline,so it’s time that the problems of revenue recognition in digital game industry be properly discussed.This paper uses case study method and literature research method to combine accounting theory with practice.Perfect World Co.,Ltd.Is selected as an example to further discuss the current revenue recognition guideline and the upcoming one.In this paper we will learn that there are mainly three operation modes in game companies: independent operation,combined operation,as well as authorized operation.Before recognizing revenue,game companies should choose either Gross Method or Net Method on the basis of certain concrete evidence.Apart from what I mentioned above,revenue recognition principles of some companies are not disclosed in detail as they should be.Based on what other scholars had achieved,we will also do some research on current dispute of avenue recognition in game industry the reason behind it.We’ll discuss the influence of the new avenue recognition guideline on Perfect World,and then give out advice to game companies in revenue recognition,aiming to promote a healthy development of the game industry in China.