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ACCA SBR IFRS 15

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › ACCA SBR IFRS 15

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • January 25, 2021 at 1:12 pm #607964
    rammeyy
    Member
    • Topics: 15
    • Replies: 18
    • ☆

    On 31 March 20X1, Crawford enters into a contract to construct a
    specialised factory for a customer. The customer paid an upfront deposit
    which is only refundable if Crawford fails to complete construction in line
    with the contract. The remainder of the price is payable when the
    customer takes possession of the factory. If the customer defaults on the
    contract before completion of the factory, Crawford only has the right to
    retain the deposit.
    Required:
    Should Crawford recognise revenue from the above transaction
    over time or at a point in time?

    Sir in the suggested answer they have recognised revenue at a single point of time. My query is should not it be recognised over a period of time. Kindly explain me the logic.

    January 26, 2021 at 7:25 pm #608152
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    This is definitely more of a SBR question but as you’re here then……..as the deposit is only refundable if they fail to complete the contract AND if the customer defaults then Crawford will retain the deposit, the likelihood of returning the money is slim so it is only right to recognise the deposit as revenue.

    Thanks

    January 27, 2021 at 7:57 am #608186
    rammeyy
    Member
    • Topics: 15
    • Replies: 18
    • ☆

    yes it from SBR study text, thanks for clarifying.

    Regards
    Rammeyy

    January 29, 2021 at 7:58 pm #608510
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    No worries, best of luck with SBR!

  • Author
    Posts
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