Deloitte, 2001. http://www. PhDessay is an educational resource where over 1,000,000 free essays are collected. htm. International Accounting Standards and its renaming to IFRS. The assignment covers all information about how to recognize revenue and there is the particular example on revenue recognition. The need for International Accounting Standards is essential; however there are a lot of obstacles that needs to be addressed and put into consideration. However, in certain circumstances, they must be applied to individual elements of a transaction in order to correctly reflect the sources of revenue. When exchanging a variety of goods, revenue is measured at fair value of the goods or services received, minus the amount transferred to cash or cash equivalents. This is just a sample. ‘International Accounting Standards’ and ‘International Financial Reporting Standards’ are Trade Marks of the IFRS Foundation. Thus, each year Leather Ltd. will earn €120,000 (€480,000/4) selling 6 publications. In this case the present value of the payment will be less than its face value. As mentioned earlier, the banking industry opposes in having such a standard, however if we look at Dubai, United Arab Emirates, with the excessive borrowing and lending with International banks in construction projects, caused “Dubai World” to collapse, as a result it put Dubai in great debt, this is a classical example for the need of International Accounting Stan… 2. Consequently, the cost of production 6 publications is €45,000 (€7,500*6). At the same time, on the contrary, recognition criteria can be applied simultaneously to two or more operations when their commercial effect cannot be determined without considering the operations as a whole. The second problem in recognizing the revenue arises in cases when the company offers its clients discounts for fast calculation. Increases in the quality of companies’ disclosures appear to have contributed to this improvement. A key issue when recording revenue is to define the moment of its recognition. IFRS 1 First-time Adoption of International Financial Reporting Standards. At the international level, International Accounting Standards Board (IASB) has been created “to formulate and publish, in the public interest, basic standards to be observed in the presentation of audited accounts and financial statements and to promote their worldwide acceptance and observance.”. According to International Accounting Standard Committee (IASC) the Framework Revenue is income that arises in the course of ordinary activities of an enterprise and is referred to by a variety of different names including sales, fees, interest, dividends and royalties (IASC, 2000). Internationalization of Accounting’ made this submission that accounting standards are the policy documents issued by recognized expert accountancy bodies relating to various aspects of measurements, treatments and disclosures of accounting transactions and events, as related to the codification of Generally Accepted Accounting Principles (GAAP). endstream endobj startxref 22 Jurisdictions now are required to use the International Financial Reporting Standards (FIRS) including the European Union, Latin American countries, Japan, and all other 620 Jurisdictions. It was reorganized in 2001 and became an independent international standard setter, the International Accounting Standards Board (IASB). Let Professional Writer Help You, 48 Vitosha Boulevard, ground floor, 1000, Sofia, Bulgaria Bulgarian reg. To give a definitive indication of the areas students will need to be aware of in relation to IAS for future CIE examinations. Rendering of services. Revenue is recognized if it is likely that the organization will receive economic benefits in the future, and these benefits can be reliably measured. The several areas include a statement of income, inventory, earning per share, and consolidation. 0 London: Copyright Licensing Agency Ltd. , p. 26. International Accounting Standards Committee (2000). on, International Accounting Standards: Revenue Recognition. Conclusion. Before we into a conclusion of whether or not it is rational to for companies to adopt international accounting standards (IFRSs) in place of local accounting standards, it will be crucial for us to comprehensively understand the key arguments against its adoption, which are … If the probability of the economic benefits for the enterprise exists and the amount of revenue can be measured reliably, income in the form of interest, royalties and dividends are recorded as follows: * Interest (fees that are levied for the use of cash and cash equivalents or amounts owed) should be recognized on a temporary basis, which is proportional to the effective yield of the asset; * Dividends (profit-sharing between the owners of the share capital in proportion to their participation in the capital of a particular class) should be recognized when the shareholders have the right to receive payment; * Royalties (fees for the use of fixed assets such as patents, trademarks, copyrights and computer software payments) should be recognized on an accrual basis according to the content of the relevant treaty. ISA 200: Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance … Signed: ____________ Conclusion The assignment represents the report that determines the important concepts of the regulatory framework defined by IAS 18 Revenue. While researching the following topic I got useful knowledge about the structure of the report. Measurement of Revenue In accordance with IAS 18 revenue is usually determined by agreement between the supplier and the customer or user of the asset. The principal issues are the recog­ni­tion of assets, the de­ter­mi­na­tion of their carrying amounts, and the de­pre­ci­a­tion charges and im­pair­ment losses to be recog­nised in relation to them. pdf Accessed: 24 Oct 2011 Summaries of International Financial Reporting Standards. The objective of IAS 16 is to prescribe the accounting treatment for property, plant, and equipment. (IASC, 2000) As the fair value is often expressed in monetary terms, the revenue will be the amount that the company has received or receivable. Dr Deferred Income account 120,000 Cr Sales account 120,000 Income Statement of Leather Ltd. for the year ended 31st March 2011 Sales 120,000 Cost of production 45,000 Gross profit 75,000 Conclusion of the Report Revenue recognition criteria provided in IAS 18 "Revenue" should normally be applied to each operation separately. The Report To: Managing Director, From: Student A Regarding: IAS 18 Date: 3/11/2011 Introduction to the Report The Conference on International Accounting Standard (IAS) 18 Revenue was held to introduce the concepts of the regulatory framework of financial reporting and to represent the given information in convenient use of practice. Limitations. Accounting for revenue and Expenses Revenue. Became an independent International standard setter, the key principle for ISA 37 is the recognition of provisions costs... 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