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Dear Sir,
Could you kindly explain what does it mean, when an entity says “It concludes that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will occur”.also, what does it mean, when an entity says “variable consideration is constrained in accordance with IFRS 15”
Thank you sir
First sentence means that you can recognise variable consideration (e.g. bonus for completing work early) if it is EXTREMELY LIKELY that you will receive it.
Second sentence means nothing at all!
Thank you
But sir for the first sentence, it says cumulative revenue will be reversed, doesn’t that mean it is extremely unlikely instead of extremely likely as you said?
ThanksSpecifically, variable consideration is only included in the transaction price if, and to the extent that, it is highly probable that its inclusion will not result in a significant revenue reversal in the future when the uncertainty has been subsequently resolved
IAS 15 Para 56
Stick with me on this one (unless we are talking about something completely different).
And remember examiner wants simple explanations!
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