a few minutes for: ias 18: revenue - ifrsbox.com · summary of ias 18 2 what is revenue? = gross...
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www.IFRSbox.com Summary of IAS 18
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A few minutes for: IAS 18: Revenue
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1982: IAS 18 originally issued1982: IAS 18 originally issued
2011: Reconsideration of IAS 182011: Reconsideration of IAS 18
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Remove Remove inconsistencies
More robust More robust framework
Improve Improve comparability
Current developmentCurrent development
1993: IAS 18 significantly revised1993: IAS 18 significantly revised
IASB (IFRS setter)IASB (IFRS setter) FASB (US GAAP setter)FASB (US GAAP setter)
Improve Improve disclosures
1 January 2017
Summary of IAS 18 – Revenue
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What is Revenue?
= gross inflow of economic benefits during the period arising in the course of
ordinary activities of an entity
increases in equity
no contributions from equity participants
Summary of IAS 18 – Revenue
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What is Revenue?
Agency relationships
PRINCIPALPRINCIPAL AGENTAGENT
- Primary responsibility for goods / services
- Inventory risk
- Establishing prices
- Customer’s credit risk
Revenue No revenue
Summary of IAS 18 – Revenue
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What is Revenue?
Agency relationships
Summary of IAS 18 – Revenue
Own–brand product Non-branded product
Revenue No revenue, just commission
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Measurement Measurement of Revenue
= fair value of consideration received or receivable
Cash Discounted futurereceipts
Fair value of goods/services received
A B
+ 10 000 EUR
Summary of IAS 18 – Revenue
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Recognition of Recognition of Revenue
= earned at the point of sale
Product / service provided to the buyer
Buyer recognized his liability
Buyer is willing to hand over cash
Monetary value has been established
Exceptions: IAS 11
Summary of IAS 18 – Revenue
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Sale of Goods
- Significant risks and rewards transferred to buyer
- No effective control over the goods sold is retained
- Revenue reliably measurable
- Economic benefits from transaction flow to the entity
- Costs in respect of the transaction reliably measurable
Summary of IAS 18 – Revenue
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Sale of Goods
Summary of IAS 18 – Revenue
Bill and hold sales Goods shipped subject to conditions
Lay away sales
Sale and repurchase Subscriptions to publications
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Can outcome of transaction be estimated reliably?
Rendering of Rendering of Services
Recognize revenue Are expenses incurred recoverable?
Revenue = recoverable expenses No revenue
Summary of IAS 18 – Revenue
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Rendering of Rendering of Services
When can the outcome of transaction be estimated reliably?
Revenue = Revenue = reliably
measurable
Economic benefits
Stage of completion
Costs = Costs = reliably
measurable
+
+
+
+
Summary of IAS 18 – Revenue
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Servicing fees
Insurance agency commissions
Rendering of Rendering of Services
Installation fees Advertising commissions
Financial service fees
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Membership fees
Rendering of Rendering of Services
Admission fees Tuition fees
Franchise fees Software development
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Interest, Royalties, Dividends
Revenue reliably measurableRevenue reliably measurableEconomic benefitsEconomic benefits
Interest
Royalties
Dividends
Effective interest method (IAS 39 /IFRS 9)
Accrual basis according to agreement
When right to receive payment is established
Summary of IAS 18 – Revenue
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www.IFRSbox.com Summary of IAS 18 – Revenue