Revenue Recognition Rules

IAS 18.14 Revenue recognition criteria for sale of goods:

• Significant risks/rewards of ownership transferred to buyer
• No continuing managerial involvement, nor effective control over goods sold
• Amount of revenue can be reliably measured
• Economic benefits from the transaction will likely flow to the entity
• Costs incurred or to be incurred can be measured reliably

3 main types of revenue

• Sales of goods
• Rendering services – based on percentage completion method; no profit should be taken in the absence of reliable measures
• Interest, royalties, dividends

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