Revenue

Question 1

What is the five-step model to account for revenue under IFRS?

Answer 1

“I-STAR” is the abbreviation:

1. Identify the contract.
2. Identify the separate performance obligations.
3. Determine the transaction price.
4. Allocate the transaction price to each performance obligation.
5. Recognize revenue when each performance obligation is satisfied.

Question 2

What is the model to account for revenue under ASPE?

Answer 2

“RCMP” and “PSS” is the abbreviation.

To account for the revenue from the sale of goods:

1. Is performance achieved?
2. Is it measured reliably?
3. Is collectability reasonably assured?

To account for the revenue from the a service or long-term contract:

1. Persuasive evidence exists?
2. Services have been rendered?
3. Sellers’ price is fixed/determinable?
4. Measured reliably?
5. Collection is reasonably assured?

Question 3

How to account for revenue from royalties, interest and dividends?

Answer 3

To account for the following:

1. Probable that economic benefit will flow to the entity.
2. Measured reliably.

Interest: Recognize on a time-proportion basis.

Royalties: As they accrue in accordance with the terms of agreement.

Dividends: When the shareholder’s right to receive payment is established.