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IAS 18 Revenue

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › IAS 18 Revenue

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 10, 2015 at 5:52 pm #275801
    Muhammad Maaz Hussain
    Participant
    • Topics: 4
    • Replies: 4
    • ☆

    (i) Included in revenue is $12 million for the receipts that the company’s auditors have advised are commission sales. the cost of these sales paid for by Petra, were $8 million. $3 million of the profit of $4 million was attributable to and remitted to Sharma (the auditors have advised that Sharma is the principal for these transactions.) Both the $8 million cost of sales and the $3 million paid to Sharma have been included in cost of sales.

    Following trail balance relates to Petra at 30 September 2015
    Revenue (note i) $197.8 million
    Cost of sales (note i) $114 million

    October 10, 2015 at 5:58 pm #275803
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23322
    • ☆☆☆☆☆

    Well, that’s all very interesting 🙂

    I don’t see any question from you, though

    October 10, 2015 at 6:21 pm #275806
    Muhammad Maaz Hussain
    Participant
    • Topics: 4
    • Replies: 4
    • ☆

    what will be the working for this for PnL and balance sheet and their journal entries?

    October 10, 2015 at 6:55 pm #275811
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23322
    • ☆☆☆☆☆

    It’s included in revenue – it shouldn’t be

    It’s included in cost of sales – it shouldn’t be

    Commission income is commission income, it’s not part of gross profit

    Therefore:

    Dr Revenue 12m
    Cr Cost of sales 11m
    Cr Commission income 1m

    What balance sheet entries?

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