Ian

0651609781

Revenue

1. IFRS Books.
The exam and tests are open book and you are allowed
during the exam
Know how to use the IFRS books.

2. recommended books (Group Statement, Study guards (Tutorial lette

Study guide (Tutorial letter) > IFRS Books

notes from 3rd year.

Test 1.
Give your best because this is the easiest test you will g

Revenue IFRS 15.

There are 5 steps that needs to be met before recognisin

1. There has to be a contract
A contract can be verbal or written.

2. Perfomance Obligations
A company can have a policy to sale a product se
A company can have a policy to combine goods a

What is perfomance obligation

Understand the company policy

1. Is the company in a position (Have a policy) to

Yes.
Then the laptop is a separate perfomance obligati

2. If a company has a policy to sale a bundle of go

There is a sale of a bundle of goods and ser

a combined perfomance obligation

In the exam how do we know if there is a policy t

Search …. If a product or service has a Stand alon
the product will be a separate perfomance obligat

3. Transaction price
The transaction price is the shelf price ( Amount on the

4. Allocation of Transaction Price

The reason why we allocate revenue to perfomance obli

some goods and services revenue is recognised over a p
some revenue is recognised over a period of sale.

Upon date os sale (The selling company) (Game) will n

because they still have an obligation to service the lapto

The revenue from warranty is recognised over a period

The Revenue from laptop.

Is recognised at point of sale.

Allocation of revenue

Stand alone price of each perfomance obligation

Stand alone price of Laptop ( Selling price of laptop wit

Stand alone price of warranty (warranty without laptop)
Total

Allocation
revenue allocated to laptop ( Stand alone price o
Total

Revenue from warranty (Stand alone price of war

Step 5

Revenue recognition

we recognise revenue when control has transferred to th

when there is transfer of risks and rewards to the buyer.

IFRS 15.
Hightlight par 2.

Identifying a contract

Par 9.
1. the parties approved a contract ( verbal or in writing)
2. state each party's rights ( The buyer has a right to rec
3. identify the payment terms.
4. the contract has commercial substance
5. it is probable the entity will collect consideration
Conclusion there is a contract between the buyer and se

Step 2.
Par 22.
Good or service that is distinct ( A product can be
a series of distinct goods or services

Sale of a product with a right of return

we need evaluate the company historical experience wit

Companies upon sale of products with right of return th

point of sale on products they do not expect to be return

On product expected to be returned they do not record r

right of return ( Contract Liability)

Journal entries on right of return

Bug

Bank (SFP) (100*100)

Revenue (P/L) (97*100)
Refund liability (SFP) (3*100)
Upon every sale you need process journal entry for Cos

Cost of Sales (P/L) (97*60)

Asset return (SFP)(3*60)
Inventory (SFP) (100*60)
nd you are allowed to use the IFRS books

uards (Tutorial letters) GAAP)

Books

siest test you will get during this year.

et before recognising revenue.

to sale a product seperately (Sale of Laptop)
to combine goods and services ( Sale of laptop and a warranty)

n (Have a policy) to sale the product on its own.

erfomance obligation.

o sale a bundle of goods and sevirce combined

dle of goods and service therefore we combine the products into

obligation

if there is a policy to sale a good or service seperately

ice has a Stand alone price then the company has a policy
perfomance obligation.
ce ( Amount on the invoice)

to perfomance obligations is because

recognised over a point of sale and
eriod of sale.

any) (Game) will not recognise revenue on warranty

to service the laptop over duration of warranty

nised over a period of time.

e obligation

g price of laptop with no warranty) xxx

anty without laptop) xxx
xxx
 Stand alone price of laptop* Transaction price
Total

d alone price of warranty*Transaction price

Total

has transferred to the buyer(Customer)

wards to the buyer.

erbal or in writing)
er has a right to receive the goods and service)

ct consideration
en the buyer and seller.

( A product can be sold on its own (stand alone price)

rical experience with such sales.

th right of return they recognise revenue at

expect to be returned

hey do not record revenue but rather

10000
9700
300
urnal entry for Cost of sales.

5820
180
6000