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Sir please I need help with this
Repro, a company which sells photocopying equipment, has prepared its draft financial statements for the year ended
30 September 2014. It has included the following transactions in revenue at the stated amounts below.Which of these has been correctly included in revenue according to IAS 18 Revenue?
A Agency sales of $250,000 on which Repro is entitled to a commission
B Sale proceeds of $20,000 for motor vehicles which were no longer required by Repro
C Sales of $150,000 on 30 September 2014. The amount invoiced to and received from the customer was
$180,000, which includes $30,000 for ongoing servicing work to be done by Repro over the next two yearsD Sales of $200,000 on 1 October 2013 to an established customer which (with the agreement of Repro) will be
paid in full on 30 September 2015. Repro has a cost of capital of 10%I was confused between B and C. but the answer is C. i still dont understand why B is not possible
Sir please is which chapter in opentuition videos and notes. I would like to stop looking at it in bpp kit as my kit till June 2015. please Sir which others chapters are not part for F7 this year, which are new as well.
thanksIAS 11 Construction Contracts has gone along with IAS 18 Revenue and both have been replaced by IFRS 15. I believe that there is a chapter on IFRS 15 in the free course notes! It should be the final chapter in the notes, just before the mini exercises (that you MUST do!)
Ok?
Sir
for the mini exercise concerning the revenue is it for IAS 18 or IFRS 15I don’t believe that the mini exercises will change as a result of IAS 18 being withdrawn.
Read the chapter in the course notes and see what you think
Meanwhile, I’ll answer your original post under IFRS 15 – but it will be on a separate page / post
In answer to your original post :
A) is separately shown under commission income or sundry income. It’s not revenue gained from ordinary trading activities
B) the disposal of an asset gives rise to an item within the statement of profit or loss called “profit (or loss) on asset disposal.” The revenue is not shown gross less book value of the asset. It is shown as the net result of the disposal
D) $200,000 receivable in 2 years’ time needs to be discounted for two years using the company’s cost of capital of 10%. The figure to include in revenue would therefore be $165,289
C) IFRS 15 caters specifically for this situation. Where revenue is made up of a combination of immediate delivery and an on-going obligation to, for example, service and maintain the asset that you sold, the revenue earned through servicing should be deferred and reflected in the separate years in which the servicing takes place (and therefore the separate years in which that particular element of revenue is earned)
Clearer now?
hi Sir
I read the chapter. there are some mini exercise about revenu after. I just wanted to know if it is IFRS 15 to practiseYes, you should be ok – I think that they are all IFRS15 compliant (from memory)
Hi Mike,
I have a confusion most of the people are saying about IAS 18 I have a recent text book from Kaplan which has IFRS 15 which covers Revenue recognition from contracts with customer as I have not finished all the IAS’s Is there any difference between the previous IAS 18 (which you mentioned will not be examinable fromSeptember onwards) and the IFRS 15.
Please reply..
Also I’m stuck at a question about revenue recognition
Which I will copy here.
Q: On 1st jan 20×1 castle enter into a contract with a customer to construct a specialised building for consideration of $10 m. Castle is not able to use the building themselves at any point during the construction. At 31st dec 20x 1, castle has incurred cost of 6 m cost to complete are $2 m. Castle decide to measure the progress towards completion based on cost incurred. To date castle has received $3m from the customer.Requirement: how should this transaction be accounted for in the year ended Dec 31.
The book has given to follow 4 steps approach.
First to calculate the overall profit:
Price
Less: cost to date
Less: cost to complete
Overall Profit or lossI’m having a profit of 2m as my answer to step 1 but the book as taken $6 as cost to date as well as cost to complete and reported an overall loss of $2m . Could you kindly rectify my confusion
Also in the second step of measuring progress:? Which is measured by input method of Cost to date compared to total cost has taken $6m/12m why. I think it should be $6m/ 10m.. Could you kindly explain
Thanks
NoureenFirst of all, there really is no need to write plaintively “Please reply”
When you post a question on the Ask the Tutor page, you WILL get a reply and we set our own target of two days although it’s invariably much less time than two days
Now, your question. There’s more in IFRS 15 than there was in IAS 18 but for F7 there’s not a lot of difference.
Equally, IAS 11 is pretty much the same as is now included within IFRS 15 so far as F7 is concerned
Now the example – I’m flummoxed! I would have said $2 million overall profit and 75% costs incurred.
I can only suggest that you check that you have read the question correctly
Sir
please is the answer.
the percentage of completion is 60% or 75%,
why the profit recognised is 2000 , isn;t it 1200 if 60% or 1500 if 75%I’m 75% complete (6 out of 8) and $2m profit x 75% recognised of $1,500
Has Noureen contacted Kaplan? Or checked that the above post has been typed correctly?
Hi mike,
Sorry for the late reply. But the question I have typed above is word by word in the text book could you kindly give your solution of the above question.
Thanks
NoureenHi
I DID answer the question! 75% complete and $1,500 profit recognised
See my post immediately before Noureen’s post just above this one
Hi Sir
IAS 18 Revenue has been replaced by IFRS15, does it mean the article regarding Revenue IAS18 is irrelevant? I’m confused as this article has only been updated on 17 August 2015?
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