Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Project Revenue under IFRS 15
- This topic has 1 reply, 2 voices, and was last updated 1 year ago by Stephen Widberg.
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- April 29, 2023 at 5:34 pm #683725
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?
April 30, 2023 at 8:23 am #683748In 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
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