Revenue should be recognised when;
- It is probable that the economic benefits associated with the transaction will flow to the entity; and
- The amount of the revenue can be measured reliably.
Revenue should be recognised on the following bases;
- Interest should be recognised on the effective interest basis. This rate should be calculated using all related fees such as finance charges, transaction costs, premiums and discounts.
- Royalties should be recognised using an accrual basis in accordance with the relevant agreement.
- Dividends should be recognised when the shareholders right to receive payment is established.
The entity should disclose the accounting policies adopted for the recognition of revenue including the methods adopted to determine the stage of completion of transactions involving the rendering of services.
In addition, the entity should disclose the amount of each category of revenue recognised during the period, showing separately, at a minimum revenue arising from;
- The sale of goods,
- The rendering of services
- Any other significant types of revenue
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Posted on February 5, 2018 by Cooney Carey