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Title: IFRS 15 Revenue from contracts with the customer
Description: This worksheet includes IFRS 15 Revenue From Contact with the customers and it shows you how to recognize revenue step by step and i summarized 6 common issues that you will face in the recognition of the Revenue ( Non Cash Consideration , Refunding , Warranty ... Etc ) and how to deal with each other with some examples.
Description: This worksheet includes IFRS 15 Revenue From Contact with the customers and it shows you how to recognize revenue step by step and i summarized 6 common issues that you will face in the recognition of the Revenue ( Non Cash Consideration , Refunding , Warranty ... Etc ) and how to deal with each other with some examples.
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IFRS 15
Revenue From Contract with Customers
What is Revenue ?
Income arises in the course of entity’s ordinary activities
5 Steps to recognize Revenue
12345-
Identify the contract with the customer
...
Determine the transaction price ( TP ) ( Contract price )
...
Recognize revenue when PO is satisfied
...
If it’s option for customer to buy the warranty then it’s revenue
...
EX:- Company A provide service to a customer for 10M $ company A is entitled to an
extra 2 M $ if the number of mistakes made falls below a certain threshold
...
Each contract includes the sale of
one product for $1,000
...
Cash is received
upfront and control of the product transfers on delivery
...
Nardone can sell the returned products
at a profit
...
It
estimates that 48 products will not be returned
...
Using an expected value method, the estimated variable consideration is $48,000 (48
products × $1,000)
...
Nardone will derecognise the inventory transferred to its customers
...
4
Financing: if the customer will pay for the product/service after significant time then the company
must determine the Present value of the revenue will be recognized
EX:- If Company A sold a product to a customer for 5M $ and the customer will pay them
after 3 years
...
5
Non Cash Considerations
When the company will not receive cash in exchange of goods and it will receive Shares
instead of cash , so the revenue recognized is the Fair Value of shares at the date of sell
...
6
Consideration paid to customer
If there is a consideration will be paid to the customer then it decreases the transaction
price
EX:- Company A enters into a contract with a major chain of retail stores
...
The terms of the
contract require Golden Gate to make a payment of $1m to compensate the customer for
changes that it will need to make to its retail stores to accommodate the products
...
Required How much revenue should be recognised by Company A in the year ended 31
December 20X1?
Answer:- The payment made to the customer is not in exchange for a distinct good or
service
...
The total transaction price is essentially being reduced by 5% ($1m/ $20m)
...
By 31
December 20X1, Company A should have recognised revenue of $3
...
Title: IFRS 15 Revenue from contracts with the customer
Description: This worksheet includes IFRS 15 Revenue From Contact with the customers and it shows you how to recognize revenue step by step and i summarized 6 common issues that you will face in the recognition of the Revenue ( Non Cash Consideration , Refunding , Warranty ... Etc ) and how to deal with each other with some examples.
Description: This worksheet includes IFRS 15 Revenue From Contact with the customers and it shows you how to recognize revenue step by step and i summarized 6 common issues that you will face in the recognition of the Revenue ( Non Cash Consideration , Refunding , Warranty ... Etc ) and how to deal with each other with some examples.