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Hey guys, first post here. Just had a question when I was reading through SouthWest Airlines 2015 10-k.

I noticed that they had a $172m "Special Revenue Adjustment" under their operating revenues, with their explanation being:

"The Company followed the transition approach of ASU 2009-13, which required that the Company adjust the existing deferred revenue balance to reflect the value, on a relative selling price basis, of any
undelivered element remaining at the date of contract modification. The relative selling price of the undelivered element (air transportation) was lower than the rate at which it had been deferred under the
previous contract, and the Company recorded a one-time, non-cash adjustment to decrease frequent flyer deferred revenue and increase revenue through the recording of a Special revenue adjustment of
$172 million."

This doesn't make much sense to me, when I read that I see: 'The selling price of our deferred revenue went down, so we decided to comply and change it, and also add $172m onto our operating revenues'.

I definitely might be missing something, if so please let me know.


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