IFRS15 Revenue

Question 1

What is revenue?

Answer 1

Revenue is income arising in the course of an entity’s ordinary/operating activities.

Question 2

Allocate transaction price to performance obligation

Answer 2

By allocating transaction price to performance obligation in proportion to its stand-alone selling price.

Question 3

Recognise revenue when obligation satisfied

Answer 3

The entity can recognise revenue when the control is transferred to the customer.

Recognise revenue overtime:
* The customer simultaneously recieves and consumes the benefits provided by entity’s performance.
* The entity’s performance creates or enhances an asset that controlled by customer.
* The entity’s performance does not create an asset with alternative use to the entity.

Recognise revenue by measuring progress towards completion.
* Input method
* Output method

Question 4

What are five steps in contract revenue?

Answer 4

1. Identify contract with customer
2. Identify separate performance obligation
3. Determine transaction price
4. Allocate transaction price to performance obligation
5. Recognise revenue when obligation satisfied

Question 5

Identify contract with customer

Answer 5

The contract is an arrangement between two or more parties that creates enforceable rights and obligations.

The contract exists when:
1. The contract has been approved by parties.
2. Each parties rights and obligations can be identified.
3. Payment terms can be identified.
4. It is probable that the seller will collect the consideration.
5. The contract has commercial substance.

Question 6

Identify separate performance obligations

Answer 6

A good or service is distinct or a series of distinct goods or services.
* The customer can be benefit from the goods or services; and
* The entity’s promise is separably identifiable from other promises in the contract.

If a promised good or service is not distinct, it should be combined with other promised goods or services as a single performance obligation.