Skip to content

Ask the Tutor ACCA SBR

Project Revenue under IFRS 15

SSoloWing3y ago
Entity T is a state owned entity. The Government has entered into an agreement with a foreign donor to carry out a project. They have decided that once the donor provides the funds to the Government, Entity T will be carrying out the performance obligations set out in the contract on behalf of the Government. The project is for 2 years, with 10 separate performance obligations. For 2 of the obligations Entity T has to setup a Call Center on land provided by the Government, the agreement is setup in a way where the Government starts using the premises even if not fully completed. (Leading me to think these 2 could fall under over time?) The rest of the obligations are made in a way where the Government can only obtain the benefits after Entity T completes the project and hands it over. Entity T has currently calculated the potential revenue to be recognized based on two methods; a) Input method (Cost) b) Progress method (Based on percent of project completed) So my question is, under IFRS 15 how should the revenue be recognized?
stephenwidbergstephenwidbergTutor3y ago#1
In the exam, set out the relevant rules and then apply them. RELEVANT RULE= recognise revenue at a point in time or recognise rule over time If over time, can use - input or output (latter is stage of completion) APPLICATION - (I think) over time - either a or b above is OK
Sign into reply to this topic.