CP-06 (Revenue and inventories)

Question 1

IFRS 15
Revenue from Contracts with Customers

Answer 1

Revenue is simply income arising in the course of an entity’s ordinary activities and different terms may be used such as:
* sales
* turnover
* royalties

Question 2

Five step model (Revenue)

Answer 2

Revenue is recognised by applying the following steps:
Step 1 Identify the contract with a customer.
Step 2 Identify the performance obligations in the contract.
Step 3 Determine the transaction price.
Step 4 Allocate the transaction price to the performance obligations in the contract.
Step 5 Recognise revenue when (or as) the entity satisfies the performance
obligations.

Question 3

Net realisable value

Answer 3

The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.