United States securities and exchange commission logo
November 10, 2020
Guy Bernstein
Chief Executive Officer
Formula Systems (1985) Ltd.
5 Haplada Street
Or Yehuda 6021805
Isreal
Re: Formula Systems
(1985) Ltd.
Form 20-F for the
Fiscal Year Ended December 31, 2019
Filed June 29, 2020
File No. 000-29442
Dear Mr. Bernstein:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2019
Consolidated Statements of Profit or Loss, page F-7
1. We note that your
presentation of revenue as "software services and proprietary
software products and
related services is based on the category for which each
subsidiary earns the
most revenue. Please tell us the amount of product and service
revenue included in
each line item and tell us what consideration was given to separately
presenting revenue from
products (i.e. licenses and hardware) and revenue from services.
We refer you to Rule
5-03(b) of Regulation S-X. As part of your response, clarify
whether you consider
the sale of proprietary licenses with significant related services
(treated as one
performance obligation) to be a product or service and quantity the
related revenue.
Guy Bernstein
Formula Systems (1985) Ltd.
November 10, 2020
Page 2
Note 2. Significant Accounting Policies
12. Revenue recognition, page F-25
2. You disclose that the residual approach is used to determine the
standalone selling prices
of software licenses due to the lack of selling software licenses on a
stand-alone basis.
Tell us how you evaluated other methods to estimate standalone selling
price of your
software licenses. Also, tell us if and how you considered whether the
selling price of the
software is highly variable. Refer to IFRS 15.79.
3. Please tell us what consideration was given to disclosing the revenue
recognised in the
reporting period that was included in the contract liability balance
at the beginning of the
period. Refer to IFRS 15.116.
4. Tell us what consideration was given to disclosing the aggregate
amount of the transaction
price allocated to the performance obligations that are unsatisfied as
of the end of the
reporting period as well as an explanation of when you expect to
recognize such revenue.
Refer to IFRS 15.120.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Megan Akst, Senior Staff Accountant at 202-551-3407 or
Christine
Dietz, Senior Staff Accountant at 202-551-3408 with any questions.
FirstName LastNameGuy Bernstein Sincerely,
Comapany NameFormula Systems (1985) Ltd.
Division of
Corporation Finance
November 10, 2020 Page 2 Office of
Technology
FirstName LastName