{"id":488,"date":"2017-10-31T07:03:57","date_gmt":"2017-10-30T23:03:57","guid":{"rendered":"http:\/\/ehluar.com\/main\/?p=488"},"modified":"2018-03-22T13:03:30","modified_gmt":"2018-03-22T05:03:30","slug":"revenue-the-5-step-model-of-new-revenue-standard-part-4","status":"publish","type":"post","link":"http:\/\/ehluar.com\/main\/2017\/10\/31\/revenue-the-5-step-model-of-new-revenue-standard-part-4\/","title":{"rendered":"Revenue – The 5-Step Model of New Revenue Standard (Part 4)"},"content":{"rendered":"

Step 3 Determine transaction price<\/u><\/strong><\/p>\n

7.1 \u00a0 The transaction price<\/u> is the amount of consideration to which an entity expects to receive<\/u> in exchange for transferring promised goods or services to a customer. It excludes amounts collected on behalf of third parties (e.g. VAT\/GST)<\/p>\n

7.2 \u00a0 The transaction price includes:<\/p>\n

– fixed consideration<\/p>\n

– variable consideration (for example, rebates or bonuses) using either a probability-weighted expected value or the most likely amount<\/p>\n

– significant financing component \u2013 the impact of the time value of money<\/p>\n

– the fair value of any non-cash consideration, and<\/p>\n

– the effect of any amounts payable to the customer.<\/p>\n

7.3\u00a0\u00a0 (IFRS 15) FRS 115 Revenue from Contracts with Customers<\/em> deals with the uncertainty relating to variable consideration by limiting the amount of variable consideration that can be recognised.\u00a0 Specifically, variable consideration is only included in the transaction price<\/u> if and to the extent that, it is highly probable<\/u> that its inclusion will not result in a significant revenue reversal<\/u> in the future when the uncertainty has been subsequently resolved.<\/strong><\/p>\n

7.4\u00a0\u00a0 Significant financing component<\/p>\n

(a)\u00a0\u00a0\u00a0\u00a0 The transaction price must be adjusted for the effects of the time value of money<\/u> if the timing of payments agreed to by the parties provides the customer or the entity with a significant benefit of financing.<\/p>\n

(b)\u00a0\u00a0\u00a0\u00a0 An exception is where the interval between transfer of the promised goods or services and payment by the customer is expected to be less than 12 months.<\/p>\n

(c)\u00a0\u00a0\u00a0\u00a0 An entity recognise revenues at an amount that reflects the price if the customer had paid cash for those goods or services when (or as) they transfer to the customer (i.e. the cash selling price).<\/p>\n

7.5\u00a0\u00a0 Non-cash consideration<\/p>\n

(a)\u00a0\u00a0\u00a0\u00a0 Any non-cash consideration expected from the customer must be measured at fair value<\/strong>.<\/p>\n

(b)\u00a0\u00a0\u00a0\u00a0 If no reasonable estimate, measure the consideration indirectly by reference to the stand-alone selling price of the goods or services promised to the customer in exchange for the consideration.<\/p>\n

Last review: 31 October 2017<\/p>\n","protected":false},"excerpt":{"rendered":"

Step 3 Determine transaction price 7.1 \u00a0 The transaction price is the amount of consideration to which an entity expects to receive in exchange for transferring promised goods or services to a customer. It excludes amounts collected on behalf of third parties (e.g. VAT\/GST) 7.2 \u00a0 The transaction price includes: – fixed consideration – variable […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[7,6],"tags":[],"class_list":["post-488","post","type-post","status-publish","format-standard","hentry","category-accounting","category-techupdates"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/488","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/comments?post=488"}],"version-history":[{"count":2,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/488\/revisions"}],"predecessor-version":[{"id":497,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/488\/revisions\/497"}],"wp:attachment":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/media?parent=488"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/categories?post=488"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/tags?post=488"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}