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IFRS 15 Revenue from contacts with customers
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IFRS
15 - objective of that standard
Revenue figure needs to be reliable so – when should
revenue
by recognised? How should it be
measured
?
Revenue
definition excludes
borrowings
- since they
increase liabilities
not equity
amounts contributed by
shareholders
(eg
share issues
)
gains
(
revaluation
gains and gains arising on the disposal of assets)
revenue
recognition criteria
when it represents the
transfer
or
goods
customer
based on the
transfer
of control over services
contract to transfer
goods
/ services represents a promise to a
performance obligation
under standard
the
5 step model
identify the
contract
with the
customer
identify the
separate performance
obligations
determine the
transaction
price
allocate the transaction price to the
perfjoamcne
obligations
recognise the
revenue
when a performance obligation is
satisfied
identify
the contract with customer
contract approved
parties committed
parties rights can be identified
cash flows will result from transaction
probable collection of consideration
contract
modification
treated
separate
if:
distinct
goods
/
services
are added
contract price increase
reflect a
'stand
alone'
value
combining
of contracts
only if:
negotiated
as a package
considerations
interdependent
single
performance
obligation
2. identify the
separate obligations
obligation
to supply
'distinct goods or services'
the revenue for each 'distinct'
obligation
is accounted for
separately
3. Determine the
transaction price
·
Expected value
(weighted average based on profitability)
·
Most likely amount
(single most likely outcome – may suitable if only two possible outcomes)
5. recognise
revenue
when (or as) a
performance obligation is satisfied
revenue recognised as
obligation satisfied
either - at a
point in time
/ over a
period of time
when
has
performance obligation
been satisfied?
the entity has a right to
payment
the
customer
has
legal total
to the assets
the customer has taken
possession
of the asset
risks
and
rewards
have been transferred
the customer has
accepted
the asset
performance obligation calculations
output
methods (surveys of completed work)
works certified/
contract price
x estimate
total revenues
works
certified
/
contract price
x estimated total costs
input methods
(costs incurred/ labour
hours
)
costs
to date/ total estimated costs x
estimated total revenues
costs
to date/ total estimate costs x
estimated total costs
disclosure
the
disaggregation
of the
revenue
into appropriate categories
opening
and closing
balance
of receivables, contract assets and contract liabilities
revenue
recognised in the reporting period that was included int the contract liabilities
opening balance
revenue recognised in the reporting period from
performance
obligations satisfied in
previous
periods
For performance obligations, a description of:
· When the company typically satisfies its
performance obligations
· The significant
payment
terms
· The nature of the goods or services that the entity has promised to transfer
·
Obligations
for returns, refunds and other similar
obligations
· Types of
warranties
and
related obligations
significant
judgements, and changes in judgements
The timing of
satisfaction
of performance obligations
The
transaction
price and the amounts allocated to
performance
obligations
assets
recognised from the
costs to obtain or fulfil a contract with a customer
, including
A
description of the judgements made
in determining the
amount
of the costs and the
amortisation
method used for each reporting period
The
closing balances
of the assets
The
amount
of amortisation and any impairment
losses
recognised in the reporting period
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