IPSAS 9 Flashcards
IPSAS 9 is about
Revenue from exchange transactions
Objective of IPSAS 9
Prescribe the treatment for revenue in public sector entities ensuring it reliably reflects economic benefits
Scope of Application of IPSAS 9
All public sector entities except government business enterprises (SOE)
Revenue recognition criteria
When future economic benefits are probably and can be measure reliably
Types of exchange transactions under IPSAS 9
Rendering of services
Sale of Goods
Use of entity’s assets yielding interest, royalties and dividends
Exchange transaction
Where an entity receives assets/services and gives approximate equal value in return
Measurement of revenue under IPSAS 9
Measured at fair value of the consideration received or receivable
When the extent of completion (for an incomplete service0 cannot be reliably determined, revenue should be measured as
the extent of recoverable cost
Where the percentage of completion (for incomplete service) can be measured reliably, revenue is measured as
Total revenue receivable * % of completion
Where the outcome of the transaction is unknown and the cost incurred is not recoverable
Recognise cost incurred as revenue (and expenses)
What 5 criteria must exist for a sale of goods to be recognised?
- Transfer of risk and rewards to buyer
- There should be no control retention with the seller
- The revenue must be reliably measurable
- There should be probable economic benefit will flow to the entity
- Cost incurred must be reliably measurable
What is the IPPSAS 9 rule for sale of goods with multiple arrangements
Revenue should be recognised separately for each identifiable component
Principal-agent relationship (IPSAS 9)
Where an agent receives revenue on behalf of a principal, the agent cannot recognise revenue. Only commissions earned can be recognised. This should not be setoff against the revenue for the principal
Treatment of interest and time sensitive revenue (IPSAS 9)
Recognise revenue by pro rating it on a time basis.
Royalties (IPSAS 9)
Revenue is recognised per the terms of the agreement
