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REVENUE RECOGNITION FRS 118 Puan Yusliena Yusoff

REVENUE RECOGNITION FRS 118 Puan Yusliena Yusoff. FRS 118 - REVENUE. Deals with accounting for revenue arising from the sale of goods , rendering of services and use by others of the enterprise’s assets yielding interest, royalties and dividends . DEFINITION.

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REVENUE RECOGNITION FRS 118 Puan Yusliena Yusoff

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  1. REVENUERECOGNITIONFRS 118PuanYuslienaYusoff

  2. FRS 118 - REVENUE • Deals with accounting for revenue arising from the sale of goods, rendering of services and use by others of the enterprise’s assets yielding interest, royalties and dividends.

  3. DEFINITION • Gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increases in equity, other than increases relating to contributions from equity participants.

  4. MEASUREMENT • At fair value of the consideration received/receivable. • Other revenue where the production of goods spreads over more than one accounting period, the consideration received may not relate to the service rendered.

  5. RECOGNITION • When it is: • Probable that future economic benefits will flow to the enterprise; & • The benefits can be measured reliably.

  6. RECOGNITION • Sale of goods • Rendering of services • Interest, royalties and dividends

  7. Sales of Goods • Recognised when all the following conditions have been satisfied: • The significant risks and rewards of ownership of goods have been transferred to the buyer. • The enterprise no longer involve in managerial of ownership and effective control over the goods sold. • The amount of revenue can be measured reliably. • It is probable that the economic benefits will flow to the enterprise • The cost incurred/to be incurred can be measured reliably.

  8. Rendering of Services • Recognised based on the stage of completion at the B/S date when the outcome can be estimated reliably, if the following conditions are met: • Amount of revenue can be measured reliably; • It is probable that the economic benefits will flow to the enterprise; • The stage of completion at B/S date can be measured reliably; & • The costs incurred and the costs to complete the transaction can be measured reliably.

  9. Interest, Royalties & Dividends • Recognised when: • It is probable that the economic benefits will flow to the enterprise; & • The amount of revenue can be measured reliably.

  10. Interest, Royalties & Dividends • The point of recognition: • Interest – time proportion • Royalties – accrual basis in accordance with the substance of the relevant agreement • Dividends – when the right to receive payment is established

  11. DISCLOSURE REQUIREMENTS • Accounting policies adopted; • Amount of each significant category of revenue recognized; • Amount of revenue arising from exchange of goods or services • Note: should also include contingent liabilities & assets, which may arise from warranty costs, claims, penalties or possible losses

  12. Examples of Accounting Policies

  13. Appendix of FRS 118

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