Page 154 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx
P. 154
Chapter 7
1.2 Revenue recognition on the sale of goods
As per IAS 18 Revenue, revenue from the sale of goods should be recognised when
all of the following criteria have been met:
the significant RISKS AND REWARDS of ownership have transferred to the
buyer
the seller does not retain continuing managerial involvement or control over the
good
revenue can be measured reliably
probable economic benefit will flow to the entity
costs can be measured reliably.
1.3 Revenue recognition on the provision of services
As per IAS 18 Revenue, revenue from the provision of serives should be recognised
when all of the following criteria have been met:
revenue can be measured reliably
probable economic benefit will flow to the entity
the STAGE OF COMPLETION can be measured reliably
costs can be measured reliably.
Consider the following companies. When do you think they would recognise
revenue?
Tesco? Tins of beans – at point of sale
Vodafone? Phone – on despatch to customer/POS, line rental – as
service provided
Kaplan? As courses progress
146
