Revenue From Contrqcts With Customers

Question 1

How does IFRS15 define revenue?
Increase
Movement of what
From
What is it not equity wise?

Answer 1

In economic benefits
Increase in assets or decrease in liabilities
From ordinary activities
Contributions from equity partnerships

Question 2

What does revenue not include?(3)

Answer 2

Sale of non current assets
Sales tax eg VAT
Amounts collected on behalf of others eg commission

Question 3

5 steps revenue contracts
Identify
Identify
Determine
Allocate
Recognise

Answer 3

Identify contract
Identify performance obligations
Determine transaction price
Allocate price to obligation
Recognise revenue when obligation satisfied

Question 4

Presentation
Contract liability

Answer 4

Dr Cash - total
Cr Revenue - what’s been received
Cr Contract liability - left to be paid

Question 5

Presentation
Contract asset

Answer 5

Dr Receivables - not yet invoiced
Cr sales - total
Dr accrued income/contract asset - what’s come in so far

Question 6

Presentation
IFRS9 impairment

Answer 6

Cr Receivables/contract asset
Dr P+L - impairment expense

Question 7

Substance over form
What is
Sale or return
Sale and repurchase
Consignment inventory

What puts risk with manufacturer
What puts risk with buyer

Answer 7

Can return if not sold in certain time
Usually on loan and later bought
Only one of them recognise

Risk of return, price varying over time
Demonstrator

Question 8

What is matching?

Answer 8

Recognising costs and income that will be generated

Question 9

Accounting treatment of constructing contracts?

Answer 9

Only recognise outcomes measurable with reasonable certainty

Question 10

Calculating gross amounts due to/from customers
What is the working (4)

Answer 10

Costs incurred/spent
Plus recognised profits
Less recognised losses
Less amounts billed

Question 11

What are profitable contracts based on?
What is the balancing figure?
When do we recognise loss making contracts?

Answer 11

Percentage completion
Work done
As soon as they are anticipated

Question 12

What is the equation for the input method?
What is the equation for the output method?

Answer 12

Costs incurred/total best estimate of costs
Work certified/total sales or contract price

Question 13

Step 1- how do we calculate expected outcome?
Step 2 - what is step 2?
Step 3 - how do we calculate receivables?
- how do we work out revenue? CoS?
Step 4 - gross amounts to or from customers?

Answer 13

Contract price
Less costs
Less estimated further costs

Percentage completion

Revenue less CoS

Revenue=contract price x % completion
Cos=costs+estimated costs x % completion

Costs incurred
Plus receivables
Less invoiced