Revenue from contracts

Question 1

What is IFRS and ASPE number

Answer 1

IFRS 15 ASPE 3400

Question 2

5 Steps for revenue recogniton

Answer 2

1. Identify the contract
2. Identify and performance obligation(s)
3. Determine transaction price
4. Allocate transaction price to each performance obligation
   5 Recognize revenue when each obligation is satisfied

Question 3

What is a contract and what are the contract attributes

Answer 3

A contract is an agreement between two or more parties that creates enforceable rights and obligations.

• The contract has been approved by all parties.
• The rights regarding goods and services to be transferred can be identified.
• The payment terms can be identified.
• The contract has commercial substance- sold for cash
• It is probable that the entity will collect the consideration to which it is entitled, considering only the customer’s ability and intention to pay.

Question 4

What is the criteria for contract combination

Answer 4

• The contracts are negotiated as a package with a single commercial objective.
• The amount of consideration to be paid in one contract depends on the price or performance of the other contract.
• The goods or services promised in the contracts (or some goods or services promised in each of the contracts) are a single performance obligation.

Question 5

when does contract modification result in a separate contracts

Answer 5

1. Change in scope of contractis due to addition of distinct services

Question 6

How is revenue recognized under aspe

Answer 6

1. performance is achieved(point of delivery for goods and percentage of completion/completed contract )
2. Revenue can be measured reliably
3. Collection us reasonably assured