Revenue - IFRS

Question 1

Recognition criteria for revenue - IFRS

Answer 1

1. Contract Exists
2. Performance Obligations are identifiable
3. Transaction price is identifiable
4. Allocate the transaction price to performance obligations
5. Revenue recognized as performance obligations are satisfied

Question 2

Recognition criteria for the existence of a contract

Answer 2

1. Both parties agree to their obligations
2. Considerations is reasonably collectible
3. Rights of each party are stated
4. Payment terms exist
5. Has commercial Substance

Question 3

REcognition criteria for performance obligations

Answer 3

Either

1. Distinct good or service
2. series of goods and services that are the same and have the same pattern of transfer to the customer

Question 4

Recognition criteria for distinct good or service

Answer 4

Both of the following

1. customer can benefit from the good or service on its own or with readily available resources
2. Promise to transfer is separately identifiable from other promises in the contract

Question 5

Effect on transaction price when there is a right to return

Answer 5

Based on historical data a portion can be allocated to the right to return obligation and that portion is allocated to the right to return performance obligation

If historical data is unavailable - do not recognize any income till the right to return has expired and there is no variability in the consideration

Question 6

Allocation of transaction Price to Performance Obligations

Answer 6

Allocate per the relative standalone selling price

Question 7

Criteria for when a warranty is a revenue performance obligation

Answer 7

1. Not required by Law
2. Length of the warranty - Longer the coverage, more likely it s a performance obligation
3. not an assurance warranty

Question 8

When are upfront non-refundable fees recognized

Answer 8

Are there activities that entity is required to undertake then the non-refundable portion is allocated as the activities are completed