MGCR 211 Lecture Notes - Lecture 8: Accrual, Earnings Management, Financial Statement
3 Oct 2016
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Revenue: inflows of assets and/or settlement of liabilities from delivering or producing goods, rendering services or other activities that constitute the entity"s ongoing major or central operations. Result of some productive activity of the firm. Recognition: process of formally recording or incoprorating an item into the financial statements of an entity as an asset, liability, revenue, expense or the like. Disclosure by other means is not recognition. To recognize a revenue it must be a) realized and b) earned. Ifrs has developed revenue recognition criteria to assist in resolving the conflict. Either rely on a critical event or recognize it gradually over time. Defer recognition to a later date if there exists any uncertainty over any one of these: performance (earned) Is it probable that the economic benefits will flow to the company: performance is deemed to have achieved. Company has completed a substantial portion of the production and sales effort.
