8. Revenue Recognition

Question 1

IFRS Standard

Answer 1

IFRS 15
▪ is the result of a convergence project with the FASB,
▪ consolidates the various pronouncements in one standard,
▪ eliminates ambiguity of previous regulations and
▪ closes regulatory gaps of multi-component transactions.

Question 2

Five Step Model

Answer 2

1. Identify contract(s) with customer
2. Identify separate performance obligations
3. Determine the transaction price
4. Allocate the transaction price
5. Recognise revenue when perf. obligation is satisfied

Question 3

earnings management with revenue recognition

Answer 3

▪ Definition of a customer to either classify profits from contracts as revenues or other income
▪ Definition whether a good or service is distinct
▪ Determination of relative stand-alone selling prices
▪ Determination when performance obligation is satisfied

Question 4

Journals for recognition and subsequent measurement

Answer 4

Initial:
bank // revenue
contract asset

subsequent:
bank // contract asset
_________revenue