Accounting for Transactions in Financial Statements

Question 1

What are the criteria to be met before we account for a contract?

Answer 1

1. contract approved by both parties
2. rights and terms identified
3. commercially has substance
4. probable consideration (not possible!!)

Question 2

What are the stages in order to recognise revenue?

Answer 2

1. identify contract
2. identify performance obligations
3. determine transaction price
4. allocate the price to the obligations
5. obligation satisfied