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Revenue recognition – services free of charge (eg investment)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Revenue recognition – services free of charge (eg investment)

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by AvatarStephen Widberg.
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  • March 30, 2023 at 1:19 pm #682079
    Avatarpericazemun
    Participant
    • Topics: 6
    • Replies: 9
    • ☆

    Dear Sir,

    Can I kindly ask you when services performed for the customer are free of charge (eg investment to attract the customer) and where we do not have contract in place (written or verbal), should we recognise that as revenue later (for instance if customer sign the contract with us later) or not?

    Thank you in advance!

    My best,
    Petar

    March 30, 2023 at 6:43 pm #682085
    AvatarStephen Widberg
    Keymaster
    • Topics: 17
    • Replies: 3452
    • ☆☆☆☆☆

    The examiner will make the scenario clear, so don’t worry.

    Assume a car wash gives a free car wash to a potential customer – hoping that the customer will come back and pay next time.

    If no contract is in place, I don’t think you can book any revenue

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