Revenue

Income arising in the ordinary course of an entity's normal trading or operating activities

Recognition
1. Identify a contract with a customer
- Parties have approved the contract
- Parties rights to goods/service are identifiable
- Payment terms can be identified
- the contract has commercial substance
- it is probable that the entity will be paid

*No contract exist if a party has unilateral enforceable right to terminate without paying any compensation

2. Identify a performance obligation in this contract

- Distinct Goods or services
Can be used on its own or by using resources that are readily avilable

- Distinct in the context of contract

Series of goods or service separately identifiable from other promises to be satisfied in the contract

3. Determine the transaction price

Amount we expect to entitled to not expect to collect to

Variable consideration

Significant Financing Component

- more than 12 months
- financing is signficant

Non-cash consideration
Measure NCC at its fair value
IF fV estimation not possible then stand-alone SP

Consideration payable to customer

for Distinct goods or services ---> Do not reduce TP
Not for Distinct goods or service ----> Reduce TP

*CP to Customer > fair value ----> Diff is Contract asset or prepayment

4. Allocating the transaction price to each performance obligation

Stand-alone selling price

Adjusted market assessment

Expected cost plus margin
Residual approach
Allocating Disocunt
- 1st Specific and then general

Expected outcome
Most likely outcome

5. Recognise revenue as the Entity satisfies performance obligations

Overtime (Meet any criteria)
Does the customer receive the asset & consume its benefits at the same time that the entity performs its obligati
If the entity is creating or enhancing an asset, does the customer get control of the asset as it is being created or e
If the entity is creating an asset, does:
􀁸the asset have no alternative use for the entity; and does
􀁸the entity have an enforceable right to payment for performance completed to date?

Otherwise Point in time

 Specific Revenue Transactions

Warranty
Assurance type ----> IAS 37
Service type ----> IFRS 15

Sale with a right of return

ut paying any compensation

Principal Agent Relationship

Principal
Control of Goods
Recognise revenue at Gross amount and commission payable as separate expe
sfied in the contract
Agent
Control of Goods is not transferred
- the entity cannot decide the selling price of the good or service;
- the entity's consideration will be in the form of commission
- the entity is not exposed to credit risk in the event that the customer defaults
- the entity does have the risk related to inventory either before or after the go

Sale Consignment
Indicators
- Product is controlled by the entity till goods sold or period expires
- Insist to return for the good
- Dealers have no unconditional obligation to pay for the good
- Entity continue to insure the product while being held by the dealer

Sale on a bill and hold basis

Control has passed to the customer if the customer is able to direct the use of t
Additional Criteria
- Customer has requested to hold the goods in the entity's possession
- Product must be identified separately
- Product must be ready for physical transfer to the customer
- Entity must not have the ability to use the product or to direct it to another cu

Additional Goods
 Material rights must have been given to the customer that it would not receive

at the entity performs its obligations?

he asset as it is being created or enhanced?
mission payable as separate expense

the good or service;

of commission
event that the customer defaults on payment;
ntory either before or after the goods have been ordered or during shipping.

sold or period expires

pay for the good

being held by the dealer

tomer is able to direct the use of the product and obtain substantially all of the remaining benefits from the product.

n the entity's possession

to the customer
roduct or to direct it to another customer
ustomer that it would not receive without entering into that contract
the product.