Page 404 - SBR Integrated Workbook STUDENT S18-J19
P. 404
Chapter 25
Example 4
Financing
Due to the length of time between the transfer of control of the asset and the
payment date (three years), this contract includes a significant financing
component.
The consideration must be adjusted for the impact of the financing transaction.
A discount rate should be used that reflects the characteristics of the customer
i.e. 5%.
Revenue should be recognised when the performance obligation is satisfied.
As such revenue, and a corresponding receivable, should be recognised at
3
$3.45 million ($4m × 1/1.05 ) on 31 December 20X1.
The receivable is subsequently accounted for in accordance with IFRS 9
Financial Instruments.
398
