REVENUE RECOGNITION PERS If - fective dan. 4, 201 1m guperndes PA vs pace Geepe: Teme i Tee, RE TE W Leases (PERG [VY wh © Financial inctramente and other contrachwal rights or obligations (PFRS 4,10, 11, PAS 29, 25) 1© Insurance contraets (PERS 4/17) 1 Nonmenciary exchange beween entities in same line of business to facilitate sales fo customer increate im equity (other than those fram equity participants) income = from ordinary comrse Of business oy or may Hot from OCB — t ceonomic benetits 5~STEP MODEL FRAMEWORK Identity the ith a cuchomer Identify the in the contract Delecmine price, | hen or of O puformance obligation ic satisfied (Dster 4: IDENTIFY THE ConTRAcT: res (van) v The contract ii in writing, orally, of in accordance w Other Cuctomary business practice) by beth parties and are committed te perform their respective obligations ¥ The entity can identify each party’ regarding the goods or services te be transferced ¥ The entity can identify te for the Goods OF servicer te be Hancferred v The contract hat the rick, fiming, or he amount of entity's future cash Frows ic expected Inge AS a Yecult of the wontract v Tre toncideration ic probable Of cllection (concider cuchmeri ability AND intention f pay) A contract does Not exist if Bet are TRUE: Y Neither the seller nor te customer hac performed any obligations under the contract and v both parties can ferminate the contract wlowt penalty = two oF more Contract entered into ot or near the fame time wi] the Same customer (or related partles Of the Customer) and account for the contract: at a single Contract if ONE OR MORE. U the following criteria are met: ius] asian) v the vontradt are negotiated af o package w] a single commercial objective v the amount Of cansidcration fo be paid in one contract depends on the price or performance of the ofier contvact V The goods or services promised in the contracts (or some goods or cervices prowiced in each Of she contract) are o single performance Obligation my IDENTIFY THE PERFORMANCE OBLIGATIONS (po) - promicy fo fransfor > customer ENHER Y @ dictines good | gervice vO Geries OF dictinet goods / Services that ore not a separate P.O DUSTER 3: DETERMINE THE TRANACTION PRICE (T-P amount of condderation fo which an entity expectt to be entited — —» doesnot include sa te Fined Sri parse © Voriabe tera Mixed, diccounts, rebate. refunds, creditt, price concessions, incentives, Perfermance bonuses, penalties, er her similar iteenc-) Vif hight) probable that a dignificant reversal will wot occur Determination of estimated amount ; cither: i = Sum vf all probability -weighted amounts in a range of patible considerations amounts - fie entity w) 0 large numer of Contract wl cimilar charactenctig Nn ~ Single amount in a range of poirible Contideration amount > far enhty wi] only two prscivle outcomes = meacured @ fair value = W fair value cannot be teliably ectimated. use stand-alone selling price ier sl ‘feat ie component —» excluded in TP \ ~ inkignificant component —* ophon 10 include excinde in TP. + praclical expedient (ee 3) —* Bomps. or lees —» Ophion to include/excinde FP ~ cath amour: oc eter Hr (such at Coupen sr voucher) =i in cxchange of distin GIs —* part of the. rolenve = nol in exchange of aisfinct Gis —» Yedwchion of the TR and therefare, of venue MUSTER 4: ALLOCATE THE TRANSACTION PRICE 10 THE PERFORMANCE OBUGATIONGT|llllllllllllllllll = allocation is based on the relative alone telling priter (SASP) of the distinct G/S ‘Sendaiees ona pet "a vei tendhy me ner SASP. 1 Directly observable — ttand-atone

uni = PO already Satictied Tome = Uabitys Fight te contideration ix unconditional (pangs of fine) Recivale av = ——+ leat = PO if already safctied feume + customer pays ot concideration oF entiby has right ty amount H{ concidevation thal i Conditional rs ‘action of PO fv H @ coneadt w lta matings there wil be 2 Fosiint teemded 1 eum she al fa et Saad niet cas " nick thE + untarned eoonue CONTRACT MODIFICATION | Change oder } variation Change Change in in setpe, ml | ee 4 4 Pee ; Distinct? Sandaone Cae © Y) — Sparate Original) + | Modification © not seperate Terminate] [New Origivat ® (©) + rob eparate Rete | __, (need Driginal Ba etn oan sh CONTRACT COSTS COS TD OBTAIN CONTRACT — + a@mmigion w Conered by other Mandan — aPPH Suh Candard = capitalized and amortined 19 Nol cwvered by Other candacd (obtained onky) © diteky Wlated the contray = practical expedient — expenced + generat or wnhancer reewurces it oxpeoted ty be revered5-STEPS TO RECOGNIZING REVENVE For TranJactions Invowing Single Fundamental issnes and Wultple Per formance Obligations STEP A A contract establishet the legal rights and obligations of the | w) respect to one more perfer manie obligation’ Legal right! of seller and customer fablicned a AgerchnanetOWlgationt O promise ti transfer a good or cevvice that is Sing Cede bit eng entity on ations 7 dictinet Cbotn capable of being distinct and Keparatels identifiable) rater ‘obligation or Cede bit , : . Amount seller i entitled au Seller iX ented bert ‘hy —% Tranjacion price & the amount the seller wu entitled to receive from the customer — 4 veceive ia caste mer || + receive fom cus mer ce pev formance obligah ons on Allocaie = ‘eck rermans | te Allocate the ee relative Me goods Or seyvices in each paipecminae | No allocation requi red each ‘eck rermans | qraniacton price Obligation oblig ation [err the Cellor recognizes vevene OF a Single | [ The Caller recognize rovenne over a At w aay fime Ws Recognize revenue plat in Fine when contol passes tr the peso ine — | At a point yond of || appropriate for EACH When (or as) cach [——3 cacremer which ic more likely if the > astemer Cniumes benehr oc in Hime time per frmance Obligation performance Obligation oufmer has « work performed 1s Satisti et * Obligahon to pay seller + Cemer Conhols asset as its * Tegal fitle to the aiset created 5 or * posceccion Of the asset * (eller is creating on ase that “ asume ef te risks and rewards has no alturnahve we ond of the ownership fhe soar has right 17 receive © accepted the aucer Payment for work completedOTHER REVENWE RELOGNITION Issuer RIGHT OF RETURN: = On arrangement in which an enlity franfexs control to a cutomer and ako grants the customer the right Yo return the produck for various reacont i tight to return the merchandise does not create a PO. for the cell. Inctead. it teprecents Detent faite te city iginal #2 4 pravide guds that the cuctomer want ty Keep. ~ Company rehirning the prdwel reccives any combination Of the following: + ful/pactial refund of any conideration paid Credit that cam be applied Oguinct amountt owed, or that will be owed. Ye the Sefer © another product in exchan = coniidcration is variable —- estimate —= decide whether or not {0 include in TP 4 4 recognize revenne Reverme NOT recognized Customer has option 10 purchase worranty ? WARRANTY: Does the warranty privide additional service ? = of included let pce a+ waranty i ncinde tee lathe tilde nara tented ato "hepa to a TF eave by fon PrRS IS PAS 37 ——PRINCIPAL-AGENT RELATIONCHIP = provides the specified ARRANGES for the GIs Heat and other party fy privide CONTROL the GIS the Gis before Wi transferred {o the custome | Primary ret ponsible for fulfiting x ‘the Contract v_ Inventory risk x ¥ Esiabliching prices x Vv Customer credit rick * = Revenme © Gross consideration ~ Revenue = Fee or commissionUCENCING - License —7 customers rights fo the intellectual preperty (iP) of an entity 2 Eee preset Y The contract requiret or cudamen expect that ihe entity will undertake aichvities the significantly offect the I? fh which the cuttonters have rights v Right granted by the licence may bate aaa Or pasitive effeett on +e, customer V No Farther tramfor of 6 DIcINGT NOT” DISTINCT SEPARATE. ?-0 SINGLE P.0 Right 10 Aeceae Right fo we ch ‘Over Time), Guat in Time) ‘Over Time Point in Time = (Vat) FRANCHISE (BUCINES I A Box) ane al ts he of od ~ feaprdiess a as RIAJRTU, fecgnize fevenne on the LATER of the following: a) dhe expenced ovtright NON-REFUNDABLE UPFRONT FEES ~ Ynitation. ahwation, wr up of It fy Be prvi or perfirmea in the ftw, Docs the payment relate to specific GIS transferred te the customer 7 J Ses No r L ‘Account for aca Account for ax an pramice 6/6 advanced payment Hor fdure &/C Revognize allecaled contideration as revenue On tractor of Ofc Reeagnire at rolenwe when fatire O/C axre prwided (may inched renwal) ——REPURCHASE AGREEMENTS = an entity ces an ascet but telaing o rignt 40 repurchase the aycet > offen vot recognized af a Vale, but a a cecured loan against the aut 7 ' —“—_ Salis on oscet® 4 = came auch or Sete (eee OO» | Customer a ‘buys oF hat he ophion fo buy the came Oud back af the Imber date et Forward call Put contract Option Option + a = obligation to = right f° = obligaiion 10 repurchaw, fepurchace repurehate if requested by the l } cuctrmer v + usher 00eo NOT cusfemer HAV ebiain contre! obtain vantal No revenne if 4 fevenwe tay oF may recognized Wot be vecegnized i i vepurchare Original = pan repurchase Original Financ Tae SiR = Fnendg] ("EI > (gia, = Frowsng Yepurchase ¢ original = nse repurchase @OFiginal price selling price = Cerecie) | | price > celling price J Does the customer have incentive 0 eerste ephlon? me Ne fi ¢ 4 eign lene cornny ER‘CONCIUNMENT Seller Feed Dealer)» Final customer Caines) PBEM (erga > | Contral over inventories transferred 10 deater? ¥ Product contvoned by the feller 4 Until «pecified event occurs No Tee Vv the celler can require the rewen of v ¥ the product or francfer te ancther J Inventovier: ellerdi FS Inventerier: dealert Deposit: “other receivables party ¥ the customer (dealer) does not have Gn unconditional obligation fo pay for the prdmet ——BILL-AND- HOLD ARRANGEMENTS Cells an ascet Aue ramping paeson of cater Blevins When doe ie calf mer obtain combat Of he predlach? IV The reason for Will-and- Wold ic cubstantive — Gores wit fe the Se apport? JV The product it separately identiied at betonging fo ihe cwinmer” the preduct is ready for physical tvansfer fy dix cucte mer of tne entity has no obligation te use the pmduct or te trancfu it fo anviner customer OTHERS Customer Incentives Lg + Buy 3, Gel 1 Free + Loyalty. programe + Digtount covpene Accounting: = Separate PO. (material right) Gift Cards /Certificater Accounting: Bold: Cath om Conieack idbllity —¥ al ave, met 4 recagnize vebenne, Wea! Redeuma: Contract Liability i ails Revenue 2 FN ee Bo Same teCONSTRUCTION CONTRACT Comtractee ~ ae PREIS applies t <> ¥ Short tem constonction contracts Y Long term construction contracts (PAs 11) @ contract cpecifically negotiated for the conchwetion of an astet or a group of interrelated ayels or @ combincition of astels that ave closely interrelakAa Of interdependent in terms of their design, technology or function or their ultimate pupore or Ute = includes dectmretion hat takes Cubsiantial period of time) 2 TYPES OF CONCIRUCTION CONTRACT 1) FIRED PRICE CONTRACT — fired contract price or fixed vate per unit of outpnl, which In come cased ave Pre-celling © Reservation © Contract 10 Set) © Deed of Absolute fale ID Uningialied materiale © customized —* part of CIID © not customized —» part of ecte Ww oc > buyers payment © Contract asset © Receivable