Revenue Under The Aasb 15, Must Be Recognised In A Style

1290 WordsApr 3, 20176 Pages
Revenue under the AASB 15, must be recognised in a style that represents the transfer of goods/services to customers in an amount that ‘reflects the consideration to which the provider expects to be entitled’ AASB 15,2015). The AASB requires the adoption of a 5 step method for this. Step 1: Identify the contract with the customer Step 2: Identify the distinct performance obligations Step 3: Determine the transaction price - The transaction price is the amount of consideration to which a provider of goods and/or services expects to be entitled in exchange for transferring the promised goods and/or services to the customer. Step 4: Allocate the transaction price to the performance obligations Step 5: Recognise Revenue when (or as) a…show more content…
Another critical requirement for users of financial statements is information, this is addressed through the disclosure of certain principles, policies and procedures to facilitate decision making, which current standards don’t adequately address, hence the issuing of AASB 15. (AASB,2014) Accordingly, a new standard is required to rectify the inconsistencies of revenue recognition and address the lack of consistent and useful information. c) Possible Impacts on Telstra’s current operations and financial statements The new recognition criteria outlined in AASB 15 will mostly impact Telstra in the areas of ‘satisfaction of performance’ and the methods of measurement of progress. (AASB 15, 2015) Under AASB 118 and AASB 111 the recognition of revenue by stage of completion is the percentage of competition method, which in Note 2.2 of Telstra’s 2016 Annual Report, they have stated they comply with. Under the new AASB 15 methods for measuring progress include the input and output methods. Telstra will need to change their procedure for measuring progress to one of the two methods, whichever depicts the most faithful representation of the nature of the good or service being promised. This may affect the periods in which some revenue is recognised, impacting their financial

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