AFM291 Chapter Notes - Chapter 4: Dont, Consignee, Consignor

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM291
• Professor: Robert Ducharme

Document Summary

Recognition: process of presenting an item in the financial statements, as opposed to merely disclosing that item in the notes. 2 conceptual views on how to account for revenue/sales: earnings approach (old ias 18, aspe 3400 approach, contract-based approach (new approach ifrs 15) Note: early revenue recognition methods entail more uncertainty, requiring more estimates and judgements from management, resulting in financial statements that are less accurate gauges of managerial performance. Earnings approach (ias 18, aspe 3400): when revenue is recognized. When risks/awards have passed from a to b. If there was a collectability issue , we shouldn"t be recognizing it. 2: if gm has a chrysler car in its lot, it sells it to consignment to chrysler (has managerial control because they can set the price) Ias 18 sale of services: what stage of completion; can recognize revenue when we can reliably estimate how far we are in completing the service.