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CPA notes for IF1: Chapter 18 - IFRS Revenue Recognition fully solved
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CPA notes for IF1: Chapter 18 - IFRS Revenue Recognition fully solved
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CPA notes for IF1: Chapter 18 - IFRSRevenue Recognition fully solved
IFRS 15 revenue definition: - correct answer ✔✔"income arising in the course of an entity's ordinary
activities"
Revenue does not include: - correct answer ✔✔- Incidental transactions
a. One-time transactions
b. Not in normal course of business
- Amounts collected on behalf of third parties (when the seller is acting as an agent, revenue should be
recorded on a net basis)
IFRS 15 steps to revenue recognition: - correct answer ✔✔1. Identify the contract
2. Identify the performance obligation(s)
3. Determine the transaction price
4. Allocate the transaction price to each performance obligation
5. Recognize revenue when each obligation is satisfied
Step 1: Identify the contract - A contract exists when all five of the following criteria are met: - correct
answer ✔✔a. The contract has been approved by all parties and all parties are committed
b. The rights regarding goods or services to be transferred can be identified
c. The payment terms can be identified
d. The contract has commercial substance
e. Probable collection of consideration from the customer
Step 1: Identify the contract - Account for multiple contracts as a single contract when the following
criteria are met: - correct answer ✔✔- Contracts negotiated as a package with a single commercial
objective
- Consideration paid in one contract depends on the price or performance of the other contract
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