Revenue and inventories Flashcards
1
Q
Five step revenue recognition model
A
Identify contract with the customer
Identify performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations
Recognise revenue when a performance obligation is satisfied
2
Q
Consideration received before the performance obligations have been satisfied journal entry
eg. deposits / advance sales
A
Dr cash
Cr deferred income
3
Q
Revenue when consideration deferred
A
Deposit + future receipts discounted back to PV x (1+ finance charge %)
4
Q
Present value calculation
A
Future value / (1+ interest rate %)^n
5
Q
Inventories are measured at the lower of…
A
Cost
Net realisable value
