Rogers Communications Inc.is a diversified Canadian communications and media company engaged in three primary lines of business: Wireless, Cable, and Media. The following is part of Rogers' revenue recognition policy note in its 2017 financial statements:

ROGERS COMMUNICATIONS INC.

Notes to the Financial Statements

December 31, 2017

NOTE 5: REVENUE

ACCOUNTING POLICY

Revenue Recognition

We recognize revenue when we can estimate its amount, have delivered on our obligations within the revenue-generating arrangements, and are reasonably assured that we can collect it. Revenue is recognized net of discounts.

Source of revenueHow we recognize revenueMonthly subscriber fees for:

• wireless airtime and data services;
• cable, telephony, and Internet services;
• network services;
• media subscriptions; and
• rental of equipment
• As the service is provided
• Revenue from roaming, long distance, pay per use, and other optional or non-subscription services and other sales of productsAs the service is provided or product is delivered
• Revenue from the sale of wireless and cable equipmentWhen the equipment is delivered and accepted by the independent dealer or subscriber in a direct sales channel
• Equipment subsidies related to providing equipment to new and existing subscribersEquipment subsidies are recognized as a reduction of equipment revenue when the equipment is activated
• Activation fees charged to subscribers in WirelessAs part of service revenue upon activation of the equipment
• These fees do not meet the criteria as a separate unit of accounting
• Advertising revenueWhen the advertising airs on our radio or television stations, is featured in our publications, or displayed on our digital properties
• Monthly subscription revenue received by television stations for subscriptions from cable and satellite providersWhen the services are delivered to cable and satellite providers' subscribers
• Toronto Blue Jays revenue from home game admission and concessionsWhen the related games are played during the baseball season and when goods are sold
• Toronto Blue Jays revenue from Major League Baseball, including fund redistribution and other distributions.When the amount can be determined
• Revenue from Toronto Blue Jays, radio, and television broadcast agreementsAt the time the related games are aired
• Revenue from sublicensing of program rightsOver the course of the applicable season
• Rewards granted to customers through customer loyalty programs, which are considered a separately identifiable component of the sales transactionsEstimate the portion of the original sales transaction to allocate to the reward credit based on the fair value of the reward credit that can be obtained when the credit is redeemed
• Defer the allocated amount as a liability until the rewards are redeemed by the customer and we provide the goods or services
• Interest income on credit card receivablesAs it is earned (i.e. upon the passage of time) using the effective interest method

Multiple Deliverable Arrangements

We offer some products and services as part of multiple deliverable arrangements. We recognize these as follows:

• divide the products and services into separate units of accounting, as long as the delivered elements have stand-alone value to customers and we can determine the fair value of any undelivered elements objectively and reliably; then
• measure and allocate the arrangement consideration among the accounting units based on their relative fair values and recognize revenue related to each unit when the relevant criteria are met for each unit individually; however
• when an amount allocated to a delivered item is contingent upon the delivery of additional items or meeting specified performance conditions, the amount allocated to the delivered item is limited to the non-contingent amount, as applicable.

Unearned Revenue

We recognize payments we receive in advance of providing goods and services as unearned revenue. Advance payments include subscriber deposits, cable installation fees, ticket deposits related to Toronto Blue Jays ticket sales, and amounts subscribers pay for services and subscriptions that will be provided in future periods.

EXPLANATORY INFORMATION

Years ended December 31(In millions of dollars)20172016Wireless:Service revenue7,7757,258Equipment sales568658Total Wireless8,3437,916Cable:Internet1,6061,495Television1,5011,562Phone353386Service revenue3,4603,443Equipment sales66Total Cable3,4663,449Business Solutions:Next generation322307Legacy5871Service revenue380378Equipment sales76Total Business Solutions387384Media:Advertising838870Subscription511474Retail352325Other452477Total Media2,1532,146Corporate items and intercompany eliminations(206)(193)Total revenue14,14313,702

Rogers' balance sheet included a current liability of $346 million at December 31, 2017, called Unearned Revenue. Unearned revenue includes subscriber deposits, cable installation fees, and amounts received from subscribers related to services and subscriptions to be provided in future periods.

Instructions

a.When does Rogers recognize its revenue from monthly subscriber fees?

b.When should Rogers record unearned revenue from its subscription services? When should it record unearned revenue for its Blue Jays home game admission revenue?

c.If Rogers (inappropriately) recorded these unearned revenues as revenue when the cash was received in advance, what would be the effect on the company's financial position? (Use the basic accounting equation and explain what elements would be overstated or understated.)