Fasb Fra 2

Conditions that must be met for a transfer of receivables to be accounted for a sale are as follows:

In 2018 it will be mandatory that AASB111 and AASB108 are replaced by AASB15. This new standards main principle necessitates entities to recognise revenue to portray the transfer of goods or services to customers in amounts that mirror the payment, of which the company expects to be entitled. AASB15 also provides regulation for transactions that were not previously addressed thoroughly, such as service revenue and contract modifications. Essentially it presents a 5 step system of Identifying the contracts with the customer, identifying the separate performance obligations in the contract, determining the transaction price, allocating the transaction price to certain performance obligations and recognizing revenue when or as the entity fulfils performance obligations – This is demonstrated towards the end of the report with a

The monthly fee should be recognized as revenue upon billing, as long as adequate provision is made for possible uncollectible amounts.

The new revenue recognition standard changes transaction and industry-specific guidance to a principle-based approach. The main point is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanging for those goods or services [2]. This new standard has five steps need to be followed. The first one is to identify the contract(s) with a customer. Then entity should identify the performance obligations in the contract. After that, an entity needs to make a decision about the transaction price and to allocate this price to the performance obligations in the contract. At last, the entity recognizes revenue when it satisfies a performance obligation. For the first step, there are some requirements the contract has to meet, like identify the right of parties and payment terms. But the old rule only provides limited disclosure information about revenue contract [3]. In some cases, an entity will combine several contracts as one contract. Also, FASB issued the guidance that helps an entity to modify its contract. Here is a concept for the second step. A good or service can be recognized

A customer walks into her local Wal-Mart Supercenter to purchase a few necessities and Christmas gifts. Once the customer has found everything on her list, she goes to the nearest register to pay for her items. Her groceries totaled $102.50, her pet food cost $21.60, the videogame she picked out for her nephew is $80.00, and finally she purchased two Wal-Mart gift cards totaling $50.00. Even though the customer’s total sale is $279.10, Wal-Mart cannot recognize any of the revenue unless the transaction meets all of the criteria listed in IAS-18. IAS-18 is an accounting regulation that mandates how companies are to determine whether or not a transaction constitutes the recognition of revenue. Revenue regularly comes from the sale of goods or prepayment for services to be rendered, however, it can only be recognized if there is an economic benefit on behalf of the seller and the reliability of the revenue is provable. Wal-Mart is in the business to sell goods to customers, so they can only recognize revenues from completed transactions that are reliable in nature (IAS-18 Revenue 2009).

A sale on a consignment basis, Tiger, in consignment base agreement, has to pay the distributer in Australia a share of the profits from the sale. Payment is not made until the item sells. However, Tiger Recognized full amount in 2016 while it had to delay once the risks and rewards of ownership have transferred to the end customer under the sell-through approach. Also any unsold merchandise will be returned back. Revenue cannot be recognized distributer acknowledges the receipts of goods. So revenue has to be recognized when occurred from the equipment sold by our distributor in 2016. Therefore, it’s essential for Tiger to create modification entries in order to reposition revenue to unearned revenue descriptions. On the other hand, $30 million cannot be recognized until the sale of equipment occurs and as IFRS states the Revenue from the sale of goods will be recognized only if the significant risks and rewards of ownership of the goods has been transmitted to the buyer. Therefore, we recommend recognizing the revenue at

According to section 2.106 of the Uniform Commercial Code, the contract on sale of goods includes both a present sale of goods and a contract to sell goods at a future time. Goods or conduct should conform to the contract. The buyer is a person who contracts to buy goods and seller is the person who sells or contracts to sell goods. Article 2 of UCC also covers the contract formation, contractual obligations of the seller and the buyer, what makes up a breach of contract and the remedies for breach of contract.

“…the ownership of the goods shall remain with the Seller which reserves the right to dispose of the goods until payment in full for all goods supplied has been received by it or until such time as the buyer sells the goods to its customers by way of bona fide sale at full market value.”

A formal document issued by the Financial Accounting Standards Board (FASB), which details accounting standards and

The third condition under section 2 of the Australian Consumer Law implies that the product must be supplied by the means of sale. As the consumer purchased the appliance from the retail store, a sale was transacted.

Also, the buyer has a certain responsibility too. They need to make sure to not completely trust the seller, because not everyone is ethical. They should examine the goods carefully, ask educated questions, and read up on the topic before going ahead and buying something. For example, in The Grapes of Wrath, the car dealer was able to take more advantage of the people because he can see the raw need on their faces, and how they didn’t really ask anything to make him give them a better deal. Therefore, the people didn’t do their part of being ethical buyers to get the best and most honest deal.

As stated earlier in the paper, under the amended revenue recognition standard, companies will undertake five steps in recognizing revenue for the goods and services they provide. The steps are as follows: Identify the contract(s) with a customer, Identify the performance obligations in the contract, Determine the transaction price, Allocate the transaction price to the performance obligations in the contract, and Recognize revenue when (or as) the entity satisfies a performance obligation.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound on request to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.

Although these questions appear quite simple, the answers to them are difficult enough. The rights and remedies of the buyer often depend on the classification of the terms. The terms of a contract are the essence of a contract and indicate what the contract will do. For instance, the price of a good, the time of its promised delivery and the description of the good will all be terms of the contract. Before entering into a contract, a series of statements are made by one party in order to encourage or induce the other party to enter into contract. A dispute may later arise as to which of the statements made should be considered a part, or a term, of the contract, and which should be taken as merely pre-contract talk, and therefore, not a part or term of the contract. Parties to a contract are bound only by its terms, not by any peripheral statements that may have been made prior to or after entering into contract. A representation which is subsequently made part of the contract ceases to be a representation and becomes something more, viz., a promise that such a thing is or shall be. The question then arises whether this representation, which has ceased to be a mere representation, and has become a term of the contract, is

1. It is permissible for the institution acting in the capacity of the ultimate purchaser to appoint, after taking possession of the subject-matter, the manufacturer as an agent to sell the subject-matter to latter’s customers on behalf of the institution.