approach to revenue recognition:
IFRS 15 establishes the principles that an entity applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer. ... Performance obligations are promises in a contract to transfer to a customer goods or services that are distinct.
Under IFRS 15, volume discounts/rebates is a type of variable consideration. Wholesalers are to record revenue at the amount it expects to receive (net of discounts/rebates).
These standards offer companies around the world guidance on how to prepare their financial statements. Businesses in more than 100 countries use IFRS, including Canada and the European Union, and publicly traded companies in these countries must also follow the standards.
The new standard on revenue from contracts with customers (IFRS 15 and ASC 606, hereafter, the 'new revenue standard') excludes insurance contracts within the scope of IFRS 4, 'Insurance Contracts' (“IFRS 4”), and, under US GAAP, those within the scope of ASC Topic 944 – 'Financial Services – Insurance'.
It means that under new IFRS 15, telecom operator must allocate a part of the revenue from prepayment plan with free handset to the sale of handset, too. Under IAS 18, the revenue is defined as a gross inflow of economic benefits arising from ordinary operating activities of an entity.
5 Steps to the New Revenue Recognition Standard
The objective of IFRS 16 is to report information that (a) faithfully represents lease transactions and (b) provides a basis for users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.
There cannot be a separate performance obligation for an entity to transport its own goods (that is, prior to transfer of control of the goods to the customer). The accounting for shipping and handling services is under discussion by the FASB and IASB.
Revenue Recognition: Determining Transaction Price
IAS 11 Construction Contracts prescribes the accounting treatment of revenue and costs associated with construction contracts. Revised December 1993. Effective 1 January 1995. Withdrawn for periods starting on or after 1 January 2018 when IAS 11 is superseded by IFRS 15 Revenue from Contracts with Customers.
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