IAS 7 at a glance
Insights into IAS 7IAS 7 sets out the requirements for presenting statements of cash flows. This article provides an overview of its objective, scope and key requirements.
Revenue recognition is a key principle in financial reporting, underpinning the integrity and comparability of financial statements across industries and global markets.
IFRS 15 ‘Revenue from Contracts with Customers’ was jointly developed by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to harmonise revenue reporting under IFRS and US GAAP. Rather than redefining what constitutes revenue, the Standard focuses on establishing a consistent framework for recognising revenue at the correct point in time and at a reliable amount.
The Standard provides comprehensive guidance on accounting for revenue recognition – however, the detailed requirements of IFRS 15 can still be challenging for preparers of financial statements to apply.
In many revenue transactions, more than one party is involved in delivering the goods and services to the customer. In those situations, it is sometimes difficult for an entity to determine whether it is acting as a principal or as an agent, and an entity must often apply significant judgement to reach a conclusion.
While the principal-agent guidance in IFRS 15 does not eliminate the need for judgement, it is intended to make the principal versus agent assessment easier. This article deals with the principal versus agent considerations of IFRS 15.
Chetan Hans
Partner – Head of CFO Advisory
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Step 3: Determining the transaction price
Insights into IFRS 15Accurate and consistent revenue recognition is a cornerstone of sound financial reporting for all businesses, ensuring comparability across industries and markets. The objective of determining the transaction price under IFRS 15 is to identify the amount of consideration an entity expects to be entitled to in exchange for transferring goods or services to a customer.
What is IFRS 2?
Insights into IFRS 2Our ‘Insights into IFRS 2’ series explains the fundamentals of accounting for share-based payments and helps reporting entities navigate the complexities of the Standard. This article provides an overview of the objective and scope of IFRS 2, including the types of transactions to which it applies.