| ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES On March 15, 2023, Ecoark Holdings Inc. changed
their name to BitNile Metaverse Inc. (“BitNile Metaverse”, “Ecoark Holdings” or the “Company”) and
they are a holding company, incorporated in the State of Nevada on November 19, 2007. Through March 31, 2023, the Company’s former
wholly owned subsidiaries with the exception of Agora Digital Holdings, Inc., a Nevada corporation (“Agora”) and Zest Labs,
Inc. (“Zest Labs”) have been treated for accounting purposes as divested. See below in this Note 1 and Note 2 “Discontinued
Operations.” As a result of the divestitures, all assets and liabilities of the former subsidiaries have been reclassified to discontinued
operations on the consolidated balance sheet for March 31, 2022 and all operations of these companies have been reclassified to discontinued
operations and loss on disposal on the consolidated statements of operations for the years ended March 31, 2023 and 2022. The Company’s principal subsidiaries consisted
of Ecoark, Inc. (“Ecoark”), a Delaware corporation which was the parent of Zest Labs, Banner Midstream Corp., a Delaware corporation
(“Banner Midstream”) and Agora which was assigned the membership interest in Trend Discovery Holdings LLC, a Delaware limited
liability corporation (all references to “Trend Holdings” or “Trend” are now synonymous with Agora) from the Company
on September 17, 2021 upon its formation, which includes Bitstream Mining, LLC, the Company’s Bitcoin mining subsidiary. As disclosed in these Notes, the Company had decided
it was in the best interests of its stockholders that it divest all of its principal operating assets through a series of spin-offs or
stock dividends to the Company’s stockholders. It intended to do so either by engaging in business combinations with existing public
companies which have trading symbols and markets like White River Energy Corp (formerly Fortium Holdings Corp.) (“WTRV”) which
acquired White River Holdings Corp on July 25, 2022, and Wolf Energy Services, Inc. (formerly Enviro Technologies US, Inc.) (“Wolf
Energy”) which acquired Banner Midstream Corp. on September 7, 2022, or by direct dividends. The Company’s plan was also driven
by the dividends it must pay to an investor which provided $12 million on June 8, 2022 in exchange for preferred stock and a warrant,
the former of which was subsequently amended, and the latter of which was subsequently cancelled. Because all spin-offs require the transactions
to be registered with the Securities and Exchange Commission, the Company did not complete any spin-offs in fiscal 2023. Because of the
plans to spin-off its principal operating subsidiaries, the Company was searching for one or more operating businesses to acquire. As
discussed below in Note 1 and in Note 3, the Company acquired BitNile.com on March 7, 2023. The Company has decided to leave Agora and
Zest Labs in the Company and to not proceed with the spin-offs of these entities, although it intends to create a trust to distribute
at least 95% of the net proceeds of the pending Zest Labs litigation recoveries, if any, to the Company’s stockholders as of September
30, 2022. The Company currently plans to transfer all of the common stock of Zest Labs Inc. into a limited liability company, of which
any net proceeds from the sale or licensing of Zest intellectual property or the aforementioned potential net proceeds from Zest litigation
would be distributed to the Company’s shareholders of record as of November 15, 2022. See the Company’s Annual Report for the
year ended March 31, 2022 on Form 10-K filed July 7, 2022 for details regarding the businesses of White River Holdings Corp, Banner Midstream
Corp and Trend Discovery Holdings, LLC. On July 25, 2022, the Company entered into and
closed a Share Exchange Agreement, by and among the Company, White River and WTRV. As a result, White River became a wholly-owned subsidiary
of WTRV and issued the Company non-voting Series A Convertible Preferred Stock (the “Series A”) which is convertible into
approximately 82% of WTRV’s common stock (not giving effect to the conversion of outstanding common stock equivalents) after the
Company elects to spin-off WTRV common stock to the Company’s stockholders and a registration statement covering the spin-off has
been declared effective. The Company’s Chief Executive Officer is also the Executive Chairman of WTRV, and the Company’s Chief
Financial Officer is the Chief Executive Officer of WTRV. The former Chief Executive Officer and director of WTRV is the son-in-law of
the Company’s Executive Chairman, and he resigned from all positions with WTRV in connection with the closing. The new Board of
Directors (the “Board”) of WTRV includes the Company’s Chief Executive Officer and the Chief Executive Officer’s
daughter as well as three other designees. The Company has determined that it is not the primary beneficiary in this transaction and has
concluded that no consolidation is required for White River as a variable interest entity. On August
23, 2022 the Company entered into a Share Exchange Agreement (the “Agreement”) with Wolf Energy and Banner Midstream. Pursuant
to the Agreement, upon the terms and subject to the conditions set forth therein, the Company acquired 51,987,832 shares of the Wolf Energy
common stock in exchange for all of the capital stock of Banner Midstream owned by the Company, which represents 100% of the issued and
outstanding shares (the “Exchange”). Following the closing of the Agreement which occurred on September 7, 2022, Banner Midstream
continues as a wholly-owned subsidiary of Wolf Energy. Energy Energy Energy
that were outstanding as of that time Energy Energy Energy Energy Energy On February 8, 2023, the Company entered into a Share Exchange Agreement
(the “SEA”) by and among Ault Alliance, Inc. (“Ault”), the owner of approximately 86% of BitNile.com, Inc. (“BitNile.com”),
a significant shareholder of the Company, and the minority stockholders of BitNile.com (the “Minority Shareholders”). The
SEA provides that, subject to the terms and conditions set forth therein, the Company will acquire all of the outstanding shares of capital
stock of BitNile.com as well as the common stock of Earnity, Inc. beneficially owned by BitNile.com (which represents approximately 19.9%
of the outstanding common stock of Earnity, Inc. as of the date of the SEA), in exchange for the following: (i) 8,637.5 shares of newly
designated Series B Convertible Preferred Stock of the Company to be issued to Ault (the “Series B”), and (ii) 1,362.5 shares
of newly designated Series C Convertible Preferred Stock of the Company to be issued to the Minority Shareholders (the “Series C,”
and together with the Series B, the “Preferred Stock”). The Series B and the Series C, the terms of which are summarized in
more detail below, each have a stated value of $10,000 per share (the “Stated Value”), for a combined stated value of $100,000,000,
and subject to adjustment are convertible into a total of up to 13,333,333 shares of the Company’s common stock, which represent
approximately 92.4% of the Company outstanding common stock on a fully-diluted basis. The Company has independently valued the Series
B and Series C as of the date of acquisition. The combined value of the shares issued to Ault was $53,913,000 using a blended fair value
of the discounted cash flow method and option pricing method. See Note 3 for the details on the asset purchase as BitNile.com did not
meet the accounting definition of a business and Note 17 for details on the Series B and C Preferred Stock. The terms of the Series
B and Series C as set forth in the Certificates of Designations of the Rights, Preferences and Limitations of each such series of Preferred
Stock (each, a “Certificate,” and together the “Certificates”) are essentially identical except the Series B is
super voting and must approve any modification of various negative covenants and certain other corporate actions as more particularly
described below. Pursuant to the Series
B Certificate, each share of Series B is convertible into a number of shares of the Company’s common stock determined by dividing
the Stated Value by $7.50, or 1,333 shares of common stock. The conversion price is subject to certain adjustments, including potential
downward adjustment if the Company closes a qualified financing resulting in at least $25,000,000 in gross proceeds at a price per share
that is lower than the conversion price. The Series B holders are entitled to receive dividends at a rate of 5% of the Stated Value per
annum from issuance until February 7, 2033 (the “Dividend Term”). During the first two years of the Dividend Term, dividends
will be payable in additional shares of Series B rather than cash, and thereafter dividends will be payable in either additional shares
of Series B or cash as each holder may elect. If the Company fails to make a dividend payment as required by the Series B Certificate,
the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured. Each share of Series B also has an
$11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of the Company, and ranks
senior to all other capital stock of the Company with respect thereto other than the Series C with which the Series B shares equal ranking.
Each share of Series B is entitled to vote with the Company’s common stock at a rate of 300 votes per share of common stock into
which the Series B is convertible. In addition, for as long
as at least 25% of the shares of Series B remain outstanding, Ault (and any transferees) must consent rights with respect to certain corporate
events, including reclassifications, fundamental transactions, stock redemptions or repurchases, increases in the number of directors,
and declarations or payment of dividends, and further the Company is subject to certain negative covenants, including covenants against
issuing additional shares of capital stock or derivative securities, incurring indebtedness, engaging in related party transactions, selling
of properties having a value of over $50,000, altering the number of directors, and discontinuing the business of any subsidiary, subject
to certain exceptions and limitations. The terms, rights, preferences
and limitations of the Series C are substantially the same as those of the Series B, except that the Series B holds certain additional
negative covenant and consent rights, and Series C holders vote with the Company’s common stock on an as-converted basis. The Company
is required to maintain a reserve of authorized and unissued shares of common stock equal to 200% of the shares of common stock issuable
upon conversion of the Preferred Stock, which is initially 26,666,667 shares. Pending stockholder approval
of the transaction, the Series B and the Series C combined are subject to a 19.9% beneficial ownership limitation. That limitation includes
shares of Series A issued to Ault on June 8, 2022 and any common stock held by Ault. Certain other rights are subject to stockholder approval
as described below. The SEA provides that the Company will seek stockholder approval following the closing. The entire transaction is
subject to compliance with Nasdaq Rules and the Series B and Series C Certificates each contain a savings clause that nothing shall violate
such Rules. Nasdaq may nonetheless disregard the savings clause. Under the SEA, effective
at the closing Ault is entitled to appoint three of the Company’s directors, and following receipt of approval from the Company’s
stockholders, a majority of the Company’s directors. The SEA also provides the holders of Preferred Stock with most favored nations
rights in the event the Company offers securities with more favorable terms than the Preferred Stock for as long as the Preferred Stock
remains outstanding. Under the SEA, while any Preferred Stock is outstanding, the Company is prohibited from redeeming or declaring or
paying dividends on outstanding securities other than the Preferred Stock. Further, the SEA prohibits the Company from issuing or amending
securities at a price per share below the conversion price of the Preferred Stock, or to engage in variable rate transactions, for a period
of 12 months following the closing. The SEA further provides
that following the closing the Company will prepare and distribute a proxy statement and hold a meeting of its stockholders to approve
each of the following: (i) the SEA and the transactions contemplated thereby, (ii) a ratification of the Third Certificate Designations
of Rights, Preferences, and Limitations of the Series A, (iii) a reverse stock split with a range of between 1-for 2 and 1-for-20, (iv)
a change in the Company’s name to BitNile.com, Inc., (v) an increase of the Company’s authorized common stock to 1,000,000,000
shares of common stock; and (vi) any other proposals to which the Parties shall mutually agree. In addition, pursuant to the SEA the Company
agreed to use its reasonable best efforts to effect its previously announce spin-offs of the common stock of Wolf Energy and White River
held by or issuable to the Company, use its best efforts to complete one or more financings resulting in total gross proceeds of $100,000,000
on terms acceptable to Ault, and financially support the ongoing Zest Labs litigation. The holders of the Preferred Stock will not participate
in the aforementioned spin-offs and distribution. In connection with the SEA, the Company and Ault also agreed that the net litigation
proceeds from the Zest Labs litigation that was ongoing as of November 15, 2022 would be held in a trust for the benefit of the Company’s
stockholders of record as of such date. In connection with the
SEA, the Company also entered into a Registration Rights Agreement with Ault and the Minority Shareholders pursuant to which the Company
agreed to file a registration statement on Form S-3 or Form S-1 with the Securities and Exchange Commission (the “SEC”) registering
the resale by the holders of the Preferred Stock and/or the shares of common stock issuable upon conversion of the Preferred Stock, to
be initially filed within 15 days of the closing, and to use its best efforts to cause such registration statement to be declared effective
by the SEC within 45 days thereafter, subject to certain exceptions and limitations. The SEA contains certain
representations and warranties made by each of the Company, Ault and the Minority Shareholders. Upon the closing, which is subject to
the closing conditions set forth in the SEA, including among other conditions the parties obtaining a fairness opinion from a national
independent valuation firm and satisfactory completion of due diligence by each of the Company and Ault, BitNile.com will continue as
a wholly-owned subsidiary of the Company. BitNile.com’s principal business entails the development and operation of a metaverse
platform, the beta for which launched on March 1, 2023. This transaction closed on March 7, 2023. On April 9, 2021, a Little
Rock, Arkansas jury awarded Ecoark and Zest a total of $115 million in damages (later reduced to $110 million) which includes $65 million
in compensatory damages and $50 million in punitive damages and found Walmart Inc. (“Walmart”) liable on three counts. The
federal jury found that Walmart misappropriated Zest’s trade secrets, failed to comply with a written contract, and acted willfully
and maliciously in misappropriating Zest’s trade secrets. See Note 19 – Commitments and Contingencies – Legal Proceedings. Trend Holdings formed four subsidiaries, including
Bitstream Mining, LLC, a Texas limited liability company (“Bitstream”), on May 16, 2021. In addition, Trend Holdings owned
Barrier Crest, LLC (“Barrier Crest”) which was acquired along with Trend Capital Management, Inc. (“TCM”). On
June 17, 2022, Agora sold Trend Holdings to an entity formed by the investment manager of Trend Discovery LP and Trend Discovery SPV and
sold Trend Discovery Exploration LLC (“Trend Exploration”) to the Company. See Note 2, “Discontinued Operations”.
The Company reclassified the operations of Barrier Crest and TCM, as discontinued operations as the disposal represents a strategic shift
that will have a major effect on the Company’s operations and financial results as of March 31, 2022. The Company made this determination for these
segments to be held for sale as the criteria established under ASC 205-20-45-1E have been satisfied as of June 8, 2022. Under ASC 855-10-55,
the Company has reflected the reclassification of assets and liabilities of these entities as held for sale and the operations as discontinued
operations as of and for the year ended March 31, 2022. The Company accounted for this sale as a disposal of the business under ASC 205-20-50-1(a)
upon the closing of the sale on June 17, 2022 at which time the gain was recognized. The Company assigned its membership interest in
Trend Holdings and its related wholly owned subsidiaries to Agora on September 22, 2021, for the sale of the initial 100 shares for $10.
On October 1, 2021, the Company purchased 41,671,121 shares of Agora common stock for $4,167,112 which Agora used to purchase equipment
to commence the Bitstream operations. Agora was organized by Ecoark Holdings to enter
the Bitcoin mining business. Because of the plunge in the price of Bitcoin in 2022 and the type of miners Agora acquired during its attempt
to close an initial public offering, Agora determined it was not presently feasible to conduct Bitcoin mining operations and ceased such
activities on March 3, 2022. In September 2022, Agora determined to become a power-centric hosting company and thus, subject to raising
capital, will focus its attention on generating revenues in this capacity. On August 4, 2021, the Company’s common
stock commenced trading on the Nasdaq Capital Market. On September 9, 2022, the Company held an annual
meeting of its stockholders, and the stockholders approved the issuance of the shares of common stock issuable upon conversion of the
Series A Redeemable Convertible Preferred Stock sold on June 8, 2022. Additionally, the stockholders approved increasing authorized common
stock to 100,000,000 shares. Articles of Amendment were filed that day. On October 28, 2022, the Company and Ecoark, Inc.
assigned all of its residual intellectual property rights and rights in the Zest Labs lawsuits to Zest Labs in connection with the anticipated
spin-off of Zest Labs common stock to the Company’s stockholders. The Board of Directors subsequently determined not to proceed
with the Zest Labs spin-off, however the assignment was not affected by that determination. On May 4, 2023, the Company amended their Certificate
of Incorporation for a 1-for-30 reverse stock split. The Company also reduced their authorized shares on a 1-for-30 basis going from 100,000,000
authorized shares down to 3,333,333 authorized shares. The Company has reflected this reverse split retroactively in their consolidated
financial statements pursuant to SAB Topic 4C. Overview of BitNile.com Metaverse BitNile.com will generate revenue from their Metaverse
primarily through the sale of tokens or coins that provide the end user with interactive entertainment (game play) and durable goods principally
for the PC and mobile platforms. The Company primarily offer the following:
1. Metaverse access – Provide access to main game content.
2. Sale of Nile Tokens (“NT”) – NT’s
can be used for additional digital game play only
3. Sale of Nile Coins (“NC”) –NC’s can
be used to participate in games of skill, buy durable goods, etc. all within the digital platform
4. SweepCoins (“SC”) – Users can use SC to
enter sweepstakes type games with a potential to win both digital goods and real world cash and prizes. While the revenue received from the sale of NT
and NC’s (collectively the “coins”) is currently nominal and nothing as of March 31, 2023, we believe that our operation
of the BitNile.com website could be a scalable source of revenue in the future. Additionally, we expect the website will be a mechanism
to help increase our brand reputation and recognition by participants, which we believe will result in the acquisition and monetization
of new users to the site. Our games operate on a free-to-play model, whereby
game players may collect coins free of charge through the passage of time and if a game player wishes to obtain coins above and beyond
the level of free coins available to that player, the player may purchase additional coin packages (“Freemium” gaming model).
Once a purchase is completed, the coins are deposited into the player’s account and the NT’s and NC’s are not separately identifiable
from previously purchased coins or coins obtained by the game player for free. Once obtained, NT and NC (either free or purchased) cannot
be redeemed for cash nor exchanged for anything outside of the Metaverse. The items these virtual coins can be spent on are generally
classified as either (1) consumables (i.e., items that are consumed by a specific action and are no longer available to a customer once
consumed, such as virtual game play) or (2) durables (digital goods, i.e., items that are accessible to a player for use throughout the
entire game, such as clothing or skins). When coins are used and played in the games, the game player could “win” and would
be awarded additional coins or could “lose” and lose the future use of those coins. We have concluded that the coins represent
both consumable goods and durables, because 1) the game player does not receive any additional benefit from the game and is not entitled
to any additional rights once the coins are consumed and 2) because once coins are used for the purchase of durable goods, those goods
will continue to benefit the player throughout their gaming life cycle. We receive customer payments via payment processors
based on the payment terms established in our terms of service (“TOS”). Payments for the purchase of NT and NC’s are
made via a payment processor (remitted to us on a daily basis), and such payments are non-refundable in accordance with our standard TOS. The Company holds no cryptocurrency or is an owner
of any digital wallets containing currencies other than fiat currency. Overview of Agora Digital Holdings, Inc. Bitstream Bitstream was organized to be our principal Bitcoin
mining subsidiary. Bitstream entered into a series of agreements and arrangements including arranging for a reliable and economical electric
power source needed to efficiently mine Bitcoin, order miners, housing infrastructure and other infrastructure to mine Bitcoin and locate
a third-party hosting service to operate the miners and the service’s more advanced miners. As discussed in this Note 1, Agora has refocused
its efforts and will become a power-centric hosting company rather than a Bitcoin mining company and will not hold any Bitcoin in its
digital wallets. To that end, Agora entered into a Master Services Agreement (“MSA”) on December 7, 2022 with BitNile, Inc.
(“BitNile”), whereby BitNile agreed to provide mining equipment which Agora would host at its West Texas location and supply
the electricity for the cryptocurrency mining. The MSA requires Agora to initially provide up to 12MW of electricity at the West Texas
site for BitNile’s use. An additional 66MW of power can be made available to BitNile as well for a total of 78MW. To meet this obligation,
the Company is required to raise at least $5,000,000 to enable the build out of the hosting facility, including the initial 12MW of power
within 45 days of the date of the MSA. As of the date of this Report, this requirement has not been met. Agora has not received any miners
in this transaction as of March 31, 2023. All significant accounting policies related to
Pinnacle Frac, Capstone, White River, Shamrock, Barrier Crest and Trend Discovery Capital Management have been removed as these entities
are reflected in discontinued operations. For full details on the policies refer to the Annual Report on Form 10-K for the year ended
March 31, 2022 filed on July 7, 2022. Principles of Consolidation On May 31, 2019, the Company entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with Trend Discovery Holdings Inc., a Delaware corporation for the Company to
acquire 100% of Trend Discovery Holdings, LLC pursuant to a merger of Trend with and into the Company (the “Merger”). Trend
Discovery Holdings, Inc. ceased doing business upon completion of the merger and Trend Discovery Holdings LLC is the subsidiary of the
Company. Upon the formation of Agora on September 17, 2021, Ecoark assigned the membership interest it owned in Trend Holdings to Agora
on September 22, 2021 when the Company purchased 100 shares of Agora common stock for $10. On March 27, 2020, the Company and Banner Midstream
Corp (“Banner Midstream”), entered into the Banner Purchase Agreement to acquire Banner Midstream. Pursuant to the acquisition,
Banner Midstream became a wholly owned subsidiary of the Company and Banner Energy Services, Inc. (“Banner Parent”) received
shares of the Company’s common stock in exchange for all of the issued and outstanding shares of Banner Midstream. The Company sold
all divisions of Banner Midstream in July 2022 and September 2022 as discussed herein. The Company applies the guidance of Topic 810
Consolidation Pursuant to ASC Paragraph 810-10-15-8, the usual
condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership
by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition
pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease,
agreement with other stockholders, or by court decree. The Company has utilized the guidance under ASC
810-10-55-4B, Case A for a Change that has resulted in the recognition of non-controlling interest. On October 1, 2021, Agora issued restricted
common stock to non-employee directors, management, employees and advisors. As a result of the restricted common share issuances, the
Company now owns less than 100% of Agora (approximately 89%). The Company expects it will continue to control Agora until it completes
the distribution of Agora common stock to its security holders described above; after that event occurs, it may still have sufficient
equity ownership to control Agora unless one or more third parties acquire a larger equity position. During the year ended March 31, 2023, Agora issued
400,000 shares of common stock to consultants and management. As a result of these issuances, the Company’s ownership percentage
in Agora dropped from approximately 90% to approximately 89%. The Company sold both White River and Banner Midstream
in July and September 2022, respectively. These entities are no longer subsidiaries of the Company. The Company has investments in WTRV
and Wolf Energy Energy Energy Energy On March 7, 2023 the Company acquired all of
the outstanding shares of capital stock of BitNile.com as well as the common stock of Earnity, Inc. beneficially owned by BitNile.com
(which represents approximately 19.9% of the outstanding common stock of Earnity, Inc. as of the date of the SEA), in exchange for the
following: (i) 8,637.5 shares of Series B and (ii) 1,362.5 shares of Series C. The BitNile.com acquisition was accounted for as an acquisition
of a group of assets as this entity did not meet the accounting definition of a business under ASU 2017-01. The following are the subsidiaries
of the Company as of March 31, 2023: Bitnile.com, Inc. 100% Ecoark, Inc., 100% Zest Labs, Inc., 100% Agora Digital Holdings, Inc., 89% Reclassifications The Company has reclassified certain amounts in
the March 31, 2022 consolidated financial statements to be consistent with the March 31, 2023 presentation, including the reclassification
of Barrier Crest, TCM, White River, Pinnacle Frac, and Capstone assets and liabilities from continuing operations to held for sale and
reclassifications of operations of Barrier Crest, TCM, White River, Pinnacle Frac, and Capstone to discontinued operations. The March
31, 2022 consolidated balance sheet has been reclassified to include the assets and liabilities sold for White River, Pinnacle Frac, and
Capstone as well. These changes had no impact on the Company’s financial position or result of operations for the periods presented. Noncontrolling Interests In accordance with ASC 810-10-45 Noncontrolling
Interests in Consolidated Financial Statements, Energy Energy Use of Estimates The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and reported amounts of revenues and expenses during the reporting period. These estimates include, but are not limited to,
management’s estimate of provisions required for uncollectible accounts receivable, fair value of assets held for sale and assets
and liabilities acquired, impaired value of equipment and intangible assets, estimates of discount rates in lease, liabilities to accrue,
fair value of derivative liabilities associated with warrants, cost incurred in the satisfaction of performance obligations, permanent
and temporary differences related to income taxes and determination of the fair value of stock awards. Actual results could differ from those estimates. Revenue Recognition The Company recognizes revenue under ASC 606,
Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be
entitled in exchange for those goods or services. The following five steps are applied to achieve
that core principle:
● Step 1: Identify the contract
with the customer
● Step 2: Identify the performance
obligations in the contract
● Step 3: Determine the transaction
price
● Step 4: Allocate the transaction
price to the performance obligations in the contract
● Step 5: Recognize revenue when
the Company satisfies a performance obligation In order to identify the performance obligations
in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or
service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or
bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its
own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct),
and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract
(i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good
or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration
to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised
in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity
must consider the effects of all of the following:
● Variable consideration
● Constraining estimates of variable
consideration
● The existence of a significant
financing component in the contract
● Noncash consideration
● Consideration payable to a
customer Variable consideration is included in the transaction
price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur
when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance
obligation on a relative standalone selling price basis. The standalone selling price is the price at which the Company would sell a promised
service separately to a customer. Th |
