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Question : X sold good to Y on 31st December 20×1 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 20×3 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 20×1 at in this scenario, tutor ?
Selling 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
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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