The Company considers the following significant estimates, assumptions and judgments to have the most significant effect on its results:
The Company generates revenue from various sources as follows:
• design, manufacture, sale and lease of proprietary theater systems for
IMAXtheaters principally owned and operated by commercial and institutional customers located in 54 countries as at June 30, 2013;
• production, digital re-mastering, post-production and/or distribution of
certain films shown throughout the
IMAXtheater network; • operation of certain IMAXtheaters primarily in the United States;
• provision of other services to the
maintenance and extended warranty services for
• other activities, which includes short-term rental of cameras and aftermarket sales of projector system components.
Multiple Element Arrangements
The Company's revenue arrangements with certain customers may involve multiple elements consisting of a theater system (projector, sound system, screen system and, if applicable, 3D glasses cleaning machine); services associated with the theater system including theater design support, supervision of installation, and projectionist training; a license to use of the IMAX brand; 3D glasses; maintenance and extended warranty services; and licensing of films. The Company evaluates all elements in an arrangement to determine what are considered typical deliverables for accounting purposes and which of the deliverables represent separate units of accounting based on the applicable accounting guidance in the Leases Topic of the
Financial Accounting Standards Board("FASB") Accounting Standards Codification ("ASC" or "Codification"); the Guarantees Topic of the FASB ASC; the Entertainment - Films Topic of the FASB ASC; and the Revenue Recognition Topic of the FASB ASC. If separate units of accounting are either required under the relevant accounting standards or determined to be applicable under the Revenue Recognition Topic, the total consideration received or receivable in the arrangement is allocated based on the applicable guidance in the above noted standards. 54
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The Company has identified the projection system, sound system, screen system and, if applicable, 3D glasses cleaning machine, theater design support, supervision of installation, projectionist training and the use of the IMAX brand to be a single deliverable and a single unit of accounting, ("the System Deliverable"). When an arrangement does not include all the elements of a System Deliverable, the elements of the System Deliverable included in the arrangement are considered by the Company to be a single deliverable and a single unit of accounting. The Company is not responsible for the physical installation of the equipment in the customer's facility; however, the Company supervises the installation by the customer. The customer has the right to use the IMAX brand from the date the Company and the customer enter into an arrangement.