1.

Revenue Recognition
Issue: The combined sales totaling to 1,500,000 was not recognized under the IFRS
The standards that must be met by IFRS
1

Significant risks and rewards of ownership have been transferred from the seller
to the buyer. There only risk is some computers might get damaged before delivery.

There needs to be a return policy for such cases. (this criterion must be met)
2 The seller has no involvement or control over the goods sold. After customer
receives their computer, SEI is no longer involved. (these criterion is met)
3 Collection of payment is probable. The products are paid for prior to being received
by the customers. (This criterion is met)
4 The amount of revenue can be reasonably measured. The services have discrete
prices, and the payments are insured. (this criterion is met)
5 Costs of earning the revenue can be reasonably measured. There is no information
regarding these criteria. (this criterion is not met)
Conclusion: The revenue can not be part of the balance sheet as of now. SEI does not meet
all the IFRS criteria for revenue recognition. They will need to establish a return/
guarantee for sold damaged goods and also provide financial statements in regards of cost
of earning. Which includes elements such as the cost of their inventory. SEI must either
address these issues or switch to ASPE.
2. Asset Recognition- CompWiz Computers
Are the seized goods from CompWiz eligible to be presented under assets
We can conclude based on these criteria:
1. Result of past transaction CompWiz computers was recently acquired by SEI.
2. Future economic benefit: SEI could have profited by selling that inventory at higher cost
than they bought the computers.
3. Future benefits can measure: The margin was not issued in the financial statement
directly, however the total amount was.
4. Control: SEI lost control of the assets as they were sized
Conclusion: The assets can not be written of. Although it is possible to recover them, there is a
possibility that they can not be recovered. Therefore, they can not be included.