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revenue recognition

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › revenue recognition

  • This topic has 1 reply, 2 voices, and was last updated 15 years ago by MikeLittle.
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  • November 28, 2010 at 2:33 am #46319
    bertha
    Participant
    • Topics: 2
    • Replies: 6
    • ☆

    how do you account for these in the financial statement-
    included in revenue is 16m for goods. the terms of sales are that sandow will incur ongoing and support cost of 1.2m per annum for three years. sandown normally make a gross profit of 40% on such service cost .

    November 28, 2010 at 6:51 am #71863
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23362
    • ☆☆☆☆☆

    Depends if you can separate the goods from the ongoing costs to be invoiced. If you CAN separate, then recognise the goods value immediately ( I assume the 1.2m per year is NOT included in 16m ) and recognise the ongoing service charge as it occurs through the years

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