-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
1/62
CAEA1214: FINANCIAL
ACCOUNTING AND REPORTING II
REVENUE
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
2/62
Dr Rusnah 2
Outline
• Measurement issue
• Recognition issue
• Sale of goods
• Rendering of services
References:
• S Chapter 5; S & S Chapter 7 & 8
• MFRS118 & MFRS101
February 2016
S Chap. 5;
S & S Chap. 7 & 8; MFRS118 & MFRS101
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
3/62
Dr Rusnah 3
Learning Objectives
After this lecture, students are able to understand the
requirements of MFRS118, specifically:
• What is revenue?
• Issues relating to revenue:
1. When to recognize revenue.
2. How to measure revenue.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
4/62
Dr Rusnah 4
Why revenue is important?
• To determine the amount of income earned by an
entity in a particular accounting period.
• Income = Revenue + Gain – (Expenses + Losses)
• Income is defined in the Framework for the
Preparation and Presentation of Financial
Statements as increases in economic benefits
during the accounting period in the form of inflows
or enhancements of assets or decreases ofliabilities that result in increases in equity, other
than those relating to contributions from equity
participants.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
5/62
Dr Rusnah 5
What is Revenue?
Revenue is income that arises in the course of ordinary
activities of an entity and is referred to by a variety of
different names including sales, fees, interest, dividends
and royalties.
MFRS118, P7:
Revenue is the gross inflow of economic benefits
during the period arising in the course of the ordinaryactivities of an enterprise when those inflows result in
increases in equity, other than increases relating to
contributions from equity participation.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
6/62
Dr Rusnah 6
What is Revenue?
•Increases in equity can be in the form of:
inflows or enhancements of assets, or
decreases of liabilities
•Ordinary activities including sale of goods (sales
revenues), provision of services (fees), uses of
funds/other resources (interest; dividends; royalties).
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
7/62
Dr Rusnah 7
What is Revenue?
• Some inflows of economic benefits do not result in
the increases in equity for the company – some eg.
(P8): amounts collected on behalf of third parties such as
sales taxes, goods and services taxes and value
added taxes, or
amounts collected on behalf of the principal in anagency relationship; revenue for an agent is the
amount of commission earned from a particular
service provided to the principal.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
8/62
Dr Rusnah 8
Conceptual Framework
ASSETS
LIABILITIES
EQUITY
Assets - Liabilities = Equity or net assets
RetainedEarnings
Share capital
+
Contributions
by owners
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
9/62
Dr Rusnah 9
Conceptual Framework
Framework
REVENUE EXPENSES
INCOME
Revenue - expenses = operating income
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
10/62
Dr Rusnah 10
•Assets•Liabilities
•Equity
•Investments by owners
•Distributions to owners•Income
•Revenue
•Expenses
•Gains•Losses
Balance sheet
Income Statement
Statement ofmovement in equity
How do you distinguish the followings:
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
11/62
Dr Rusnah 11
When to recognize revenue?
• The primary issue in accounting for revenue is
determining when to recognize revenue, i.e. the
timing.
• Revenue is recognized when it is probable that
future economic benefits will flow to the entity
and these benefits can be measured reliably.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
12/62
Dr Rusnah 12
Revenue arises from MFRS118, P1:
Sale of goods – P3 Rendering of
services – P4
Use of entity’s
assets: interest,
royalties &
dividends – P5
Goods
produced
by entity
Goods purchased
for resale
Land & other property
held for resale
Performance of a
contractually agreed task
e.g. Construction contracts – MFRS111
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
13/62
Dr Rusnah 13
Use of Resources – P5
(a) Interest — charges for the use of cash or cashequivalents or amounts due to the entity;
(b) Royalties — charges for the use of long-term
assets of the entity, for example, patents,
trademarks, copyrights and computer software; and(c) Dividends — distributions of profits to holders of
equity investments in proportion to their holdings
of a particular class of capital.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
14/62
Dr Rusnah 14
Revenue is the first item that appears in the incomestatement – MFRS101, P82 (see also the example given
in P102).
It represents the gross inflow of cash, receivables or otherconsiderations arising in the ordinary activities of an
enterprise.
What is meant by “ordinary activities”?? Ordinary activities are any activities which are
undertaken by the company as part of the main operations
of the company.
Presentation of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
15/62
Dr Rusnah 15
How is revenue measured?MFRS118, P9 - 10:
Revenue should be measured at the fair value of the
consideration received or receivable minus any tradediscounts or rebates allowed.
What is fair value??
Fair value is the amount for which an asset could beexchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction – P7.
Measurement of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
16/62
Dr Rusnah 16
Measurement of revenue is usually straight forward.
However, in the following circumstances, substance
over form considerations are applied:
• Barter trade or exchange transaction – P12
• In substance financing arrangements – P11
• Combination of sale and services example,
franchising arrangements
Measurement of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
17/62
February 2016 Dr Rusnah 17
Barter trade: if transactions consists of exchanges of
non-cash assets – need to differentiate as either similar or
dissimilar assets. Only recognize as revenue in the case of
dissimilar assets;How to determine the amount of revenue?
Measured at the fair value of the goods or services
received, adjusted by the amount of any cash or cash
equivalents transferred or the fair value of the goods or
services given up, adjusted by the amount of any cash or
cash equivalents transferred.
Measurement of Revenue
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
18/62
Dr Rusnah 18
Important point to note:
Revenue can only be recognized if it has been
earned or realized, not a mere transfer of assets.
Measurement of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
19/62
Dr Rusnah 19
Example 1
On 2nd February 2016 Awan Bhd transferred trading
merchandize to Emas Bhd with a cost of RM1,000,000 for
an invoice amount of RM1,020,000. In return Awan Bhd
received from Emas Bhd trading merchandize at a cost ofRM1,010,000 and can be sold at a retail price of about
RM1,030,000. Apart from the exchange of merchandize,
Awan Bhd. paid cash of RM100,000 to Emas Bhd.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
20/62
Dr Rusnah 20
Example 1
Question: Can the transaction be recognized as revenue
by Awan Bhd?
The transaction should be treated as a mere transfer ofmerchandize and not as a realized sale transaction.
Why?
Because it involves a swap of inventories in variouslocations to fulfill demand on a timely basis in a particular
location, both of which are for the purpose of Awan’s
trading operations – P12.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
21/62
Dr Rusnah 21
Example 1: Solution
In the book of Awan Bhd.Journal entries:
RM’000 RM’000
Dr. Inventories account 1,010(for the good received from Emas Bhd)
Cr. Inventories (old) account 1,000(for the good transferred to Emas Bhd)
Cr. Cash account 100
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
22/62
Dr Rusnah 22
Example 2
Refer to example 1, assume that the transaction
represents a sale of goods to Emas Bhd. Emas Bhd pays
for the goods by transferring a machine to Awan Bhd.
The fair value of the machine is RM 1,010,000.
Question: How should this transaction be recognized byAwan Bhd?
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
23/62
Dr Rusnah 23
Example 2: Solution
In this case, this is an exchange of dissimilar assets &
therefore, Awan Bhd should recognize the transaction as
a sales revenue. The amount of revenue should be
measured at RM 1,010,000, which is the fair value of the
machine received – P12.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
24/62
Dr Rusnah 24
Example 2: Solution
In the book of Awan Bhd.Journal entries:
RM’000 RM’000 Dr. Machinery account (under PPE) 1,010
Cr. Sales revenue 1,010
Dr. Cost of goods sold 1,000Cr. Inventories account 1,000
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
25/62
Dr Rusnah 25
What do you do when you cannot measure reliably the
fair value of the non-cash asset received?
• Measure by reference to the fair value of goodssold/services provided, or
• Use selling prices for goods and services
Example 2: Solution
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
26/62
Dr Rusnah 26
Example 3
Awan Bhd sold goods to Emas Bhd with a cost ofRM1,020,000 for an invoice amount of RM1,060,000.
In payment for the goods received, Emas Bhd
transferred non-cash asset to Awan Bhd worth about the
invoice amount, the fair value of which cannot bedetermined reliably. The normal selling price of Awan’s
goods is 50% markup on cost.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
27/62
Dr Rusnah 27
Question: How will Awan Bhd measure this revenue?
Example 3
Amount of sales should be based on the normal selling
price less trade discounts given.So based on the normal selling price, amount of revenue
would have been RM1,080,000 (i.e. 150% x
RM1,020,000).
The difference between this amount and the actual invoicevalue should be deemed as trade discounts allowed to the
buyer.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
28/62
Dr Rusnah 28
In the book of Aman Bhd.
Journal Entries:
RM’000 RM’000
Dr. Sundry assets 160Cr. Sales revenue 160
Dr. Cost of good sold 120
Cr. Inventories account 120
Example 3
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
29/62
Dr Rusnah 29
In Substance Financing – P11
How??
For example, a company gives credit under hire purchaseor installment plan, hence, necessary to split up the total
consideration receivable into:
• Revenue from sale of goods; and
• Interest revenue for the financing provided.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
30/62
Dr Rusnah 30
1. Value of revenue from the sale of goods may be measured
by discounting all future receipts using an implicit rate ofinterest in the arrangement; or
2. The equivalent cash sale price is used if it is clearly more
evident.
• The imputed rate of interest is the more clearlydeterminable of either:
• (a) the prevailing rate for a similar instrument of an issuer
with a similar credit rating; or• (b) a rate of interest that discounts the nominal amount of
the instrument to the current cash sales price of the
goods or services.
February 2016
In Substance Financing – P11
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
31/62
Dr Rusnah 31
•This revenue should be recognized based on the
normal requirement for sale of goods.
•The interest revenue is measured as the difference
between the total consideration receivable and the fairvalue of the sales revenue; the interest revenue should
be spread over the financing period.
February 2016
In Substance Financing – P11
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
32/62
Dr Rusnah 32
Example 4
Baba Bhd sold a machine with a cost of RM1,000,000to Nyonya Bhd on 12 February 2016. The terms of the
sale include a five annual installments of RM300,000
each payable at the end of each year. The cash selling
price of the machine is RM1,020,000.
Question: How will you record the revenue in the
accounts of Baba Bhd ?
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
33/62
Dr Rusnah 33
Example 4: Solution
The total consideration receivable is RM1500,000 (i.e.RM 300,000 x 5 years). The cash selling price of the
machine is RM1,020,000 and may be used to measure the
revenue from the sale of goods.
Therefore, the difference of RM480,000 should be treated
as interest revenue and be recognized over the five years
period using an appropriate basis such as sum of digitmethod or straight line method.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
34/62
Dr Rusnah 34
In the book of Bayu BhdJournal Entries:
RM’000 RM’000
Dr. Debtor’s account 1,500
Cr. Sales revenue 1,020Cr. Deferred interest revenue 480
Dr. COGS 1,000
Cr. Machinery Inventories account 1,000
Example 4: Solution
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
35/62
Dr Rusnah 35
At the end of each year, over the five years period, an
appropriate amount is recognized as interest revenue as
follows:
Example 4: Solution
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
36/62
Dr Rusnah 36
The total interest revenue is allocated over a 5 year period based on sum of digits method.
Sum of digits = 1+2+3+4+5= 15
allocation of interest: SOD SL
2014 5/15 x 480,000 = 160,000 96,0002015 4/15 x 480,000 = 128,000 96,000
2016 3/15 x 480,000 = 96,000 96,000
2017 2/15 x 480,000 = 64,000 96,000
2018 1/15 x 480,000 = 32,000 96,000480,000 480,000
Example 4: Solution
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
37/62
Dr Rusnah 37
Journal Entries:
RM’000 RM’000
2016 Sum of digits Straight line
Dr. Cash 300 300
Cr. Debtor account 300 300
Dr. Deferred revenue 160 96
Cr. Interest revenue 160 96
Example 4: Solution
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
38/62
Dr Rusnah 38
Combination of sales of goods and
rendering of services – P13
For example:
• Sales of computer software plus free after sale services
and technical support;
• Franchise arrangements which cover initial supply of
equipment and continuing services;
• Sale of goods which provide after sale services for
specified periods.
February 2016
bi i f l f d d
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
39/62
Dr Rusnah 39
Then, you have to split the transactions into two:
• Sale of goods
•
Services to be rendered.
February 2016
Combination of sales of goods and
rendering of services – P13
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
40/62
Dr Rusnah 40
Example 5
Mapple Bhd entered into a franchise arrangement with
BBM Bhd for the latter to use and market its patented
computer software, Doors.
The arrangement calls for payment of RM100 million upfront to cover initial supply of software and technical
support and services because Doors is unique to BBM
Bhd itself and there is no market equivalent service price
of this nature.
February 2016
E l 5
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
41/62
Dr Rusnah 41
However, the estimated cost to provide the technical
support and services, based on the company similar
franchise arrangements in the past, is about RM20 million
and it is considered that a 50% mark-up on cost is areasonable profit for services.
Example 5
Question: How would you record the franchise revenue?
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
42/62
Dr Rusnah 42
Example 5: Solution
The fair value of the service revenue should be measuredfirst.
In this case, it can be measured with reference to the given
cost plus a reasonable profit:
RM20 million x 150% = RM30 million.
This service revenue of RM30 million may be recognized
progressively over the five years period by reference to
the stage of completion of the services provided. The
difference of RM70 million represents revenue from the
sales of the software.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
43/62
Dr Rusnah 43
The measurement issue also affects the timing of revenuerecognition.
How?
Revenue must be reliably measured before it can berecognized.
When there are uncertainties relating to the measurability of
the amount of revenue arising from a transaction, revenuerecognition should be postponed until the uncertainties are
resolved.
Measurement of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
44/62
Dr Rusnah 44
Recognition of Revenue
Sale of Goods – P14:
Provided that the amount is measurable and it is not
unreasonable to expect ultimate collection, then revenue
is recognized when following conditions are satisfied:
• The enterprise has transferred to the buyer the
significant risks and rewards of ownership of the
goods, see also P15.• All significant acts have been completed see also P16 .
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
45/62
Dr Rusnah 45
• The enterprise retains no continuing managerialinvolvement in or effective control of the goods
transferred to a degree usually associated with ownership,
see also P17; and
Recognition of Revenue
• No significant uncertainty exists regarding:• consideration• costs
• Returns, see also P17, 18 and 19.
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
46/62
Dr Rusnah 46
Service Revenue:
Essential feature: Performance – P20
• Revenue is recognized as the service is performed(stage of completion method) provided that no
uncertainty exists regarding:1. Consideration
2. Costs3. Stage of completion.
Recognition of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
47/62
Dr Rusnah 47
• The stage of completion/percentage of completionmethod – revenue is recognized in the accounting
periods in which the services are rendered.
• The recognition of revenue on this basis provides
useful information on the extent of service activityand performance during a period.
Recognition of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
48/62
Dr Rusnah 48
The stage of completion may be determined by a variety
of methods include:(a) surveys of work performed;
(b) services performed to date as a percentage of total
services to be performed; or
(c) the proportion that costs incurred to date bear to the
estimated total costs of the transaction. Only costs
that reflect services performed to date are included in
costs incurred to date. Only costs that reflect services performed or to be performed are included in the
estimated total costs of the transaction.
Recognition of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
49/62
Dr Rusnah 49
Interest revenue:
Interest should be recognized on a time proportion basis
taking into account the principal outstanding and therate applicable – MFRS118, P30 (a).
However,
Recognition of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
50/62
Dr Rusnah 50
For Financial institutions in Malaysia, the recognition ofinterest revenue on loans & advances must also be inaccordance with BNM guidelines (BNM/GP3 and GP8)relating to suspension of interest on non-performing
loans.Covered under specialized accounting course
Recognition of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
51/62
Dr Rusnah 51
Example 6
May Bank Berhad grants a loan of RM1 million on 1
April 2015 at an interest rate of 12 % per annum to a
client.
Question: What is the amount of interest to be recognizedas revenue by May Bank for year ended 31 December
2015?
May Bank Berhad should recognize an interestincome of RM90,000 ( i.e. RM 1,000,000 x 9/12 x
12%)
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
52/62
Dr Rusnah 52
Royalties:
Royalties should be recognized on an accrual
basis in accordance with the term of the relevant
agreement – MFRS118, P30(b).
Recognition of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
53/62
Dr Rusnah 53
Example 7
Kuari Bhd owns a granite quarry. Bitumen Bhdoperates the quarry. The royalty agreement between
Kuari Bhd and Bitumen Bhd stipulates that Kuari
Bhd should be paid RM100 for every square meterof granite extracted by Bitumen Bhd.
Question: When will Kuari Bhd recognize theroyalty revenue?
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
54/62
Dr Rusnah 54
As and when Bitumen Bhd extracts the granite,
usually there will be some form of statement
which Bitumen Bhd should submit to Kuari Bhd
and Kuari Bhd will recognize accordingly as the
statement been received.
Example 7
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
55/62
Dr Rusnah 55
Dividend revenue:
Dividends should be recognized when the
shareholder’s right to receive payment is
established – MFRS118, P30 (c).
Recognition of Revenue
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
56/62
Dr Rusnah 56
Example 8
Angkasa Bhd is an investment company. It hasinvestments in shares of listed companies on
Bursa Malaysia. Its year end is 30 June. It had the
following shares:Counter No of Shares Dividend/ Date
Share Declared
A 100,000 0.02 31.03.15
B 200,000 0.05 30.04.15C 300,000 0.10 30.09.15
D 100,000 0.10 01.01.16
February 2016
l 8
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
57/62
Dr Rusnah 57
Question: What is the dividend revenue recognizedfor the year ended 30 June 2016?
Example 8
Counter No of Shares Dividend/ Date
Share DeclaredA 100,000 0.02 31.03.15
B 200,000 0.05 30.04.15
C 300,000 0.10 30.09.15
D 100,000 0.10 01.01.16
Financial year end: 01/07/15 - 30/06/16
February 2016
E l 8
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
58/62
Dr Rusnah 58
Dividend revenue recognized for the year ended 30 June
2016:
C shares (300,000 x 0.10) = RM 30,000
D shares (100,000 x 0.10) = RM 10,000Gross dividends RM 40,000
Example 8
February 2016
MFRS118 id i t f
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
59/62
Dr Rusnah 59
MFRS118 provides circumstances of
uncertainties relating to the measurement
of revenue:
Consideration
Costs
Returns
February 2016
Guide to test for revenue
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
60/62
Dr Rusnah 60
Is ultimate collection reasonably
expected?
Yes
NoDeferrecognition
Is consideration reasonably
determinable?
Yes
No
Defer
recognition
Guide to test for revenue
recognition…
February 2016
Guide to test for revenue
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
61/62
Dr Rusnah 61
Are costs (including warranties) to be
incurred reasonably determinable?
Are returns significant and
unpredictable?
Yes
Defer
recognition
Defer
recognition
No
Recognize revenue
Yes
No
Yes
Guide to test for revenue
recognition…
February 2016
-
8/18/2019 CAEA1214 Lecture 1 Revenue Semester 2 2015 2016
62/62
Disclosure Requirements
P35:
• Accounting policies adopted, including the methods
adopted to determine the stage of completion of
transactions involving the rendering of services;• The amount of each significant category of revenue
recognized;
• The amount of revenue arising from exchange of goods
or services;
• Any contingent liabilities or assets (P36).