Question : X sold good to Y on 31st December 20x1 and the control was transferred on same date. Consideration agreed by X was 2000 shares in Company ABC which had fair value of £4 at the date.
However the price is due at 31st December 20x3 where the FV is expected to be £6 per share.
Is this scenario possible since I don't know whether non cash consideration and financing element can be present within the same scenario ?
If it is possible can you please justify the amount of revenue to be recognized at 31st December 20x1 at in this scenario, tutor ?
Ask the Tutor ACCA SBR
Revenue Recognition
6y ago#1Selling company is receiving shares in the future - it's a possible scenario - I don't think there's a short answer!
The EY guidance suggests that the company might apply IFRS 2 principles - so you would use the FV of the goods transferred
https://www.ey.com/Publication/vwLUAssets/ey-applying-revenue-september-2019-new/$File/ey-applying-revenue-september-2019.pdf
If you are receiving shares, then 'financing element is irrelevant - that would only be relevant for CASH receivable in the future.
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