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Flashcards

Revenue - C

D A English 66 cards

Cards in this deck (66)

  1. 1IFRS 15: REVENUE FRON CONTRACTS WITH CUSTOMERSSet out rules for the recognition of revenue based on transfer of control to the customer from the entity supplying the goods or services.
    Goods and services are based upon the transfer of control.
  2. 2Income :Increase in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in an increase in equity other than those relating to contributions from equity participant
  3. 3RevenueIncome arising in the course of an entity ordinary activities
  4. 4ContractAn agreement btween two or more parties that create enforceable rigths and obligation
  5. 5Contract assetAn entity right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is condition on something other than the passage of time
  6. 6ReceivableAn entity right to consideration that is unconditional – ie only the passage of time is required before payment isdue
  7. 7Contract liability:An entity obligation to transfer goods or services to a customer
  8. 8Customer:A party that has contracted with an entity to obtain goods or services that are an output of the entity ordinary activities in exchange for consideration.
  9. 9Performance obligation :A promise in a contract with a customer to transfer to the customers food/services
  10. 10Stand along selling priceThe price at which an entity would sell a promise good or service separately to a customer
  11. 11Transaction priceThe amount of consideration to which an entity exepcts to tbe entitled in exchange for transferring promise goods or service to a customer excluding amount collected on behalf of third parties
  12. 12REVENUE IS RECOGNISED AND MEASURED USING A 5 STEP MODEL STEP 1Step 1 Identity the contract with the customer
  13. 13Step 2Identify the spate performance obligation
  14. 14Step 3Determine the transaction price
  15. 15Step 4Allocate the transaction price to the performance obligations
  16. 16Step 5Recognise revenue when a performance obligation is satisfied
  17. 17An entity must be able to reasonably measure the outcome of a performance obligation. T/FT
    An entity must be able to reasonably measure the outcome of a performance obligation.
  18. 18The incremental costs of obtaining a contract are recognised as an asset if .........the entity expects to recover those assets
  19. 19Methods of measuring the amount of performance completed to date encompass ...............output methods and input methods
  20. 20Output methodsrecognise revenue on the basis of the value to the customer of the good or services transferred
    Work certified to date/Total contract revenue
  21. 21Input methodsrecognise revenue on the basis of the entity input such as labour hours resources consumes cost incurred. If using a cost based method the cost incurred must contribute to the enetity progress in satisfying the performance obligation
    Cost to date/ Total estimated cost
  22. 22Indicators of the transfer of controlThe entity has a present right to payment for the asset
    The customer has legal title to the asset
    The entity has transferred physical possession of the asset
    The significant risk and rewards of ownership have been transferred to the customer
  23. 23Warranties :Distinct services and is accounted for as a separate performance obligation .
    If customer does not have the option to purchase the warranty separately.
  24. 24Principal versus Agent: PRINCIPALPrincipal if it controls the promised goods or service before transferred to the customer , if performance obligation is satisfied the entity recognise revenue in the gross amount.
  25. 25AgentAgent if it performance obligation is to arrange for the provision of goods or services by another party
  26. 26Repurchase agreements :Three forms
    Entity has an obligation to repurchase the asset
    An entity has the right to repurchase the asset
    An entity must repurchase the asset if requested to dos o by the customer
  27. 27The entity will account for the contract as:A lease in accordance with IFRS 16 if the repurchase price is below the orginnal selling price
    OR
    Financial arrangement if the repurchase price is equal to or greater than the original selling price.
  28. 28If the entity is obliged to repurchase at requested of customer it must consider ifcustomer is likely to exercise ption
  29. 29If repurchase is lower than original selling price and it is considered that the customer does not therefore have significant economic incentive to exercise the option, the contract should be accounted for as what?an outright sale, with a right of return.
  30. 30If repurchase is greater or equal to original selling price in market:Treat as financial arrangement
  31. 31Sold asset remaing on X premisesSold asset remaing on sellers premises
  32. 32Seller of an asset retains ability to use asset T/FTRUE
  33. 33Consignment arrangementWhen product is delivered from a supplier to a customer under this agreement , the customer Does not obtain control of the product at that point in time so no revenue is recognised upon delivery
  34. 34FEATURES OF Consignment arrangmenetSupplier controls the product until an event occurs
    Suppliers can required the return of the product or transfer.
    Customer does not have an unconditional obligation pay for the product
    NO RISK AT ALL FOR SUPPLIER
  35. 35If transferred to customerThe inventory should be recognised as such in the customer statement of financial position together with liability to supplier/manufacturer
    Any deposit should be deducted from the liability and the excess classified as a trade payable
  36. 36Has not been transferred to the dealer, the following apply.The inventory should not be included in the dealer statement of financial position until the transfer of control has taken place.
    Any deposit should be included under other receivables
  37. 37Bill-and-Hold arrangementsRemains with the Seller for a specified period, perhaps because the customer lack storage facilities
    Control not transferred until goods are delivered
  38. 38Criteria metThe reason for the bill and hold must be substantive
    The product must be separably identified as belonging to the customer
    The product must be ready for physical transfer to the customer
    The entity cannot have the ability to use the product or to transfer it to another customer.
  39. 39PRESENTATION AND DISCLOSURE contract liabilityA contract liability is recognised and presented in the statement of financial position where a customer has paid an amount of consideration prior to the entity
  40. 40When performance obligations are made, entity msut determine what amounts to include as revenue and costs in each accounting period. “OVER TIME” OR “AT A POINT IN TIME” Summary of accounting treatmentWhen performance obligations are made, entity msut determine what amounts to include as revenue and costs in each accounting period.
    “OVER TIME” OR “AT A POINT IN TIME”
    Summary of accounting treatment
  41. 41Statement of profit or lossRevenue and costs
    Profit recognised in the contract
  42. 42Contract Asset/LIability CalculationCOSTS INCURRED TO DATE+ PROFITS (W) - AMOUNT INVOICED
  43. 43Workings(W) Profits :Q77 & 79 80 81 141 : REVENUE (*x%) – (EVERY SINGLE COST MENTIONED) (*x%
  44. 44Part Profits:IF PART OF REVENUE WAS PAID INSTEAD
    PROFITS*(AMOUNT PAID TO DATE/TOTAL REVENUE)
  45. 45IFRS 15 RECOGNISED REVENUE FOR CUSTOMERSSTEP 1 TOTAL ALL COSTS AND REVENUE IDENTIFIED.
  46. 46STEP 2FIND THE :% OF COSTS
    % OF REVENUE
    THE % IS THE ANSWER.
    MAKE ADJUSTMENTS IF NECESSARY
  47. 47Work invoiced to date as % of total contract price is valid for performance measuremnetWork invoiced to date as % of total contract price is valid for performance measuremnet
  48. 48IF COMPANY THINKS ITS TOO EARLY TO MAKE IT REALISBLE THAT A CONTRACT IS PROFITABLE:NTRACT IS PROFITABLE:
    COSTS = REVENUE
  49. 49Governement GrantsAssitance in the form of transfer of resource in return for past or future compliance with certain conditions relating to the operating activities of the entetity.
  50. 50Grants related to assets.Government grants whose primary condition is that an entity qualifying for them should purchase construct or otherwise acquire non current assets.
  51. 51Grant related to incomeGovernemnt grant other than those related to assets
  52. 52Forgivable loansLoans for whioch the lender undertakes to waive repaymnet under certain prescribe conditions
  53. 53Fair ValueThe price that would be received to sell an asset or paid to transfer a liability in an orrderlyu transcation between market pariticpants at the measurement date
  54. 54Should not recognise government grants until it has reasonable assurance. What are the two factors?The entity will comply with any conditions attached to the grant
    The entity will actually receive the grant
  55. 55Any related contingency should be recognised underr IAS37 Provision contigent liability and contingency assets
  56. 56Grant should be shown asdeferred income (CURRENT LIABILITY).
  57. 57Grants related to incomePresent as a separate credit
    Deduct from the related expense
  58. 58Repayment of a grant related to income:Apply against amortised deferred income set up in respect of the grant
  59. 59Repayment of a grant related to an asset :increase the carrying amount of the asset or reduce the deferred income balance by the amount repayable. The Depreciation that would have been recognised should be recognised as an expense.
  60. 60Government assistance ValueCannot reasonably have a value place on them
    Cannot be distinguished from the entity normal trading transacations
  61. 61DEPOSITS HAVE NOTHING TO DO WITH REVENUE.DEPOSITS HAVE NOTHING TO DO WITH REVENUE.
  62. 62Deferred INCOME, .also known as unearned revenue, refers to advance payments a company receives for products or services that are to be delivered or performed in the future. DEFFERED INCOME IS A LIABILITY
  63. 63Transaction Price£10000/(1.0X)^Y
    X = Discount Rate
    Y = Number of Years
  64. 64Allocation Price Provisions(Part of the cost/Total ACT Cost)*Total Deal cost
  65. 65Contract for Revenue recognisition Calculation (OPENTUTITION)Revenue - Profit = Cost
  66. 66Profit(TOTAL REVENUE - TOTAL COST)*Amount completed

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Flashcards on Revenue - C, created by D A on 14/04/2019.
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