Identify the contract Identify the performance Determine the Allocate the transaction Recognise the revenue as/when
with the customer obligations in the contract transaction price price to the performance performance obligation is
obligation satisfied
C PO TP A R
Revenue Gains
Generated in course of ordinary activities Generated through abnormal transactions (disposals) – OCI / OI
Core Principle
Transfer of goods for an amount equal to the expected consideration entitled to
Step 1:
Customer is person contracted to obtain output of entity in exchange for consideration
Criteria to identify a contract
, Approved and parties committed to obligations
Rights identified
Pmt terms identified
Comm substance
Collection of consideration probable
Once the criteria has been met no reassessment unless significant changes occur
If criteria not met continue to assess if subsequently met
If consideration received before criteria met revenue only if:
No remaining obligation to transfer goods/services and full non-refundable consideration received
Contract terminated and consideration non-refundable
Recognise consideration as L until event above occurs or contract criteria met at the amount of consideration
R > O = Contract Asset
O > R = Contract Liability
Receivable Contract Asset
Unconditional right to consideration Conditional right to consideration
Wholly unperformed contract
NO contract exists if No performance from entity & No receipt of consideration
Step 2:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller sjg2797. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.92. You're not tied to anything after your purchase.