Revenue from contracts with customers Flashcards
Income
I-ncrease in economic benefits during the accounting period
- inflows of asset or decrease of liabilities
- results in increase in equity
Revenue
Income arising in the course of an entity’s ordinary activities
Recognise revenue
AS/when the entity satifies the performance obligation
5 steps process to recognition & measurement
1- Identify the contract with a customer
2- Identify the performance obligation
3- Determine the transaction price
4- Allocate the transaction price to performance obligation in the contract
5- Recognise revenue when/as the entity satisfy the performance onligation
Contract criteria
A- Approved by all parties
B- Each parties rights to goods/service identifiable
C- Payment terms identifiable
D- Contract has commercial substance
E- Probable that entity will collect the consideration
journal to recognise revenue
DR Receivable
CR Revenue
Delay revenue recognition
DR recievable
Cr Refund liability
step 2
Identifying performance obligation
performance obligation
Promise made to a customer within a contract
When is revenue recognised
When performance obligation is satified
Step 3
determining transaction price
Transaction price
- total price quoted
- amount we expect to be entitled to
Refund liabilities
Amount received less the amount the amount entity expects to receive
Refund asset
Right to recover goods
Recognising revenue & loss allowance
Dr Receivable (A) TP
CR Revenue (I) TP
Dr Impairment: Credit loss(E) ECL
Cr Receivable: loss allowance (-A)m ECL
