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PFRS 15:
Revenue 2.)
RECOGNITION from Installment
Contracts Sales
with
Customers
3.)
4.) 5.)
Long-term
Franchise Consignme
Constructio
Accounting nt Sales
n Contracts
PFRS
15
Revenue from Contracts
with Customer
Marielle R. Castaneda
BSA-4A
?
Before the change
When and how to recognize revenue
Different
accounting for New types of
economically Inadequate transactions
similar disclosure emerges
transactions.
Contract
modifications
Variable
Fixed Amount = 50,000
performance bonus
= 100,000 based on completion
date
Recognize Variable
Consideration when:
1. The company has experience 2. Based on experience, it is highly
with similar contracts and are probable that there will not be a
able to estimate the cumulative significant reversal of revenue
amount of revenue previously recognized.
At what point should Hogwarts Co. recognize the management fee and
the performance-based incentive fee related to James?
@ the
over time point of
time
PFRS 15: Revenue from Contracts with Customers
CONTRACT COST
Globemart sells the same handsets for 3,600 and the same
monthly plans for P800 per month without handset.
Step
2 PO no. 1: Network
Monthly Fee P1,200
Identify the Mos. of subscription
services monthly
performance 12
plan
obligation Total transaction price
PO no. 2: Apple
(PO) P14,400
Iphone handset
PFRS 15:Telecommunications Company
Step 4
Stand- Allocated Billing
Performance alone Transactio Revenu per
Allocate Obligation Selling n price e month
the TP to price
the PO Network P9,600 P10,473 P872.75 P1,200
services
Handset 3,600 3,927 3927.00 0
Total P13,20 P14,400
Step 5 0
Recognize PO 1: Network Services (monthly plan) - Over
revenue time, as a monthly network services are provided.
when (or as)
the entity
satisfies a
PO 2: Handset - at the point of time, when handset is
PO delivered to Clay Jensen.
Step
4
This would imply that the relative split
Allocate
the TP to between customization service and post
the PO delivery service is 100:10.
Step 5
Recognize Measure the progress towards completion as of December
revenue
when (or
31, 2017.
as) the Software development (585,000/1,935,000) 30%
entity Post-delivery services (0/90,000) 0%
satisfies a
PO
Cost Progress Allocated Revenue
Performance Estimated incurre to transacti recognized
obligation total cost d to completi on price in 2017
date on
Software developmet P1,935,000 P585,00 30% P2,250,00 675,000
0 0
Post-delivery support 90,000 0 0% 225,000 0
Total P2,025,000 P585,00 n/a P2,475,00 P675,000
PFRS 15: Illustration for Software
0 0
development
PFRS 15: REVENUE RECOGNITION
Other Revenue Recognition
5- Step Process Issues