ACCA Strategic Professional · Strategic Business Reporting (International) · Revenue
Which of the following, on its own, is sufficient under IFRS 15 for a seller to recognise revenue over time rather than at a point in time?
Revenue is recognised over time when the customer simultaneously receives and consumes the benefits of the entity's performance as it performs. Contract duration, invoicing and contract-specific costs are not criteria, because the test depends on how control of the goods or services transfers to the customer.
- AThe customer receives and consumes the benefits of the seller's performance as the seller performsCorrect
- BThe contract is expected to last longer than twelve months
- CThe seller has issued an invoice for part of the contract price
- DThe seller has incurred costs that are specific to the contract
Explanation
IFRS 15 gives three criteria for over-time recognition, one being that the customer simultaneously receives and consumes the benefits as the entity performs. Contract length, invoicing and costs incurred do not by themselves determine the pattern of transfer of control.
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