- This topic has 5 replies, 2 voices, and was last updated 9 years ago by
.
-
Posts
-
Hi Mike,
In lecture notes:
Revenue is the difference between apparent sale value and fair value where sales are financed by the seller. What exactly does this sentence mean i.e. what is “apparent sale value” and what is “sales financed by the seller”? Aren’t all sales financed by seller?A sale financed by the seller is where the customer incurs no debt
Sales are normally financed (paid for) by the customer but sometimes a sale could be made for a heavily discounted amount – even $zero
I have in mind the Kodak film company from MANY years ago. The company realised that they made most profits from processing films. But unless people had a camera, they couldn’t take photographs and so never had the need to have a film processed
So Kodak GAVE away cameras
The apparent sale value was $zero and the fair value was … whatever was the value of the camera
In that case, revenue recognition would be the fair value – $zero, the apparent sale value and maybe you can see how ‘the sale is being financed by the seller’?
Thank you. That’s an interesting concept to learn about. Will be looking forward for you to upload the video for the IFRS 15 with your unique teaching style and examples 🙂
- You must be logged in to reply to this topic.