Summary of IAS 18 Essay Example for Free

Summary of IAS 18 EssayRevenue the gross influx of stinting benefits (cash, receivables, other assets) arising from the public operating activities of an entity (such as sales events of goods, sales of services, pursuit, royalties, and dividends). IAS 18.7Measurement of RevenueRevenue should be measured at the fair value of the consideration received or receivable. IAS 18.9 An exchange for goods or services of a uniform nature and value is not regarded as a transaction that generates revenue. However, exchanges for dissimilar items be regarded as generating revenue. IAS 18.12 If the inflow of cash or cash equivalents is deferred, the fair value of the consideration receivable is less than the nominal bar of cash and cash equivalents to be received, and discounting is appropriate. This would occur, for instance, if the seller is providing interest-free credit to the buyer or is charging a below-market rate of interest. by-line must be imputed based on market rates. IAS 18. 11Recognition of RevenueRecognition, as defined in the IASB Framework, means incorporating an item that meets the definition of revenue (above) in the income statement when it meets the following criteria it is probable that any proximo stinting benefit associated with the item of revenue will flow to the entity, and the amount of revenue throne be measured with reliability IAS 18 provides guidance for recognising the following specific categories of revenue Sale of GoodsRevenue arising from the sale of goods should be accepted when all of the following criteria have been satisfied IAS 18.14 the seller has transferred to the buyer the signifi discharget risks and rewards of self-will the seller retains neither continuing managerial involvement to the degree usually associated with ownership nor effective support over the goods sold the amount of revenue shtup be measured reliably it is probable that the economic benefits associated with the transaction will flow to the se ller, and the costs incurred or to be incurred in respect of the transaction can be measured reliablyRendering of ServicesFor revenue arising from the rendering of services, provided that all of the following criteria are met, revenue should be recognised by reference to the stage of completion of the transaction at the rest period sheet date (the percentage-of-completion method) IAS 18.20 the amount of revenue can be measured reliably it is probable that the economic benefits will flow to the seller the stage of completion at the balance sheet date can be measured reliably and the costs incurred, or to be incurred, in respect of the transaction can be measured reliably. When the above criteria are not met, revenue arising from the rendering of services should be recognised only to the extent of the expenses recognised that are recoverable (a cost-recovery approach. IAS 18.26 Interest,Royalties, and DividendsFor interest, royalties and dividends, provided that it is probable th at the economic benefits will flow to the first step and the amount of revenue can be measured reliably, revenue should be recognised as follows IAS 18.29-30 interest using the effective interest method as set out in IAS 39 royalties on an accruals basis in accordance with the substance of the relevant agreement dividends when the shareholders right to receive payment is conventional Disclosure