REVENUE REVISITED（Part 1）

　　ACCA P2 考試：REVENUE REVISITED （Part 1）

　　On 28 May 2014, the International Accounting Standards Board （IASB）, as a result of the joint project with the US Financial Accounting Standards Board （FASB）, issued IFRS 15, Revenue from Contracts with Customers. Application of the standard is mandatory for annual reporting periods starting from 1 January 2017 onward （though there is currently a proposal to defer this date to 1 January 2018） and earlier application is permitted.

　　In line with ACCA's established rule, accounting standards issued by 1 September in a given year are examinable from 1 September in the following year, so IFRS 15 will be examinable in P2 from the September 2015 session.

　　This article considers the application of IFRS 15, Revenue from Contracts with Customers using the five-step model. The new standard introduces some significant changes so you should ensure that you have the latest editions of all study materials.

　　Historically, there has been a significant divergence in practice over the recognition of revenue, mainly because International Financial Reporting Standards （IFRS） have contained limited guidance in certain areas. The original standard, IAS 18, Revenue, was issued in 1982 with a significant revision in 1993, however, IAS 18 was not fit for purpose in today's corporate world as the guidance available was difficult to apply to many transactions. The result was that some companies applied US GAAP when it suited their needs.

　　Users often found it difficult to understand the judgments and estimates made by an entity in recognising revenue, partly because of the 'boilerplate' nature of the disclosures. As a result of the varying recognition practices, the nature and extent of the impact of the new standard will vary between entities and industries. For many transactions, such as those in retail, the new standard will have little effect but there could be significant change to current practice in accounting for long-term and multiple-element contracts.

　　IFRS 15 replaces the following standards and interpretations：

　　·IAS 11, Construction Contracts

　　·IAS 18, Revenue

　　·IFRIC 13, Customer Loyalty Programmes

　　·IFRIC 15, Agreements for the Construction of Real Estate

　　·IFRIC 18, Transfer of Assets from Customers

　　·SIC-31, Revenue - Barter Transactions Involving Advertising Services

　　One effect of this for the ACCA exams is that construction contracts are no longer an excluded topic in P2.

　　The core principle of IFRS 15 is that an entity shall recognise revenue from the transfer of promised good or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard introduces a five-step model for the recognition of revenue.

　　The five-step model applies to revenue earned from a contract with a customer with limited exceptions, regardless of the type of revenue transaction or the industry.