F2 Revenue from Contracts with Customers

Revenue from contracts with customers, including both goods/services sales and construction contracts.

Contributions from owners (like share capital), proceeds from sale of non-current assets, and amounts like VAT collected on behalf of others.

Only the commission (the business’s portion), not the total amount received from the customer

Because they are not from the entity’s ordinary activities and are a means of raising finance, not income from operations.

The specific promises in a contract with customers that must be satisfied to recognize revenue.

Income is defined as increases in economic benefits during the period in the form of inflows or enhancements of assets, or decreases of liabilities, that result in increases in equity other than those relating to contributions from equity participants.

Revenue is a subset of income that arises in the course of the ordinary activities of an entity, such as sales of goods, provision of services, interest, dividends, or royalties.

Distinct goods or services promised in a contract that must be delivered to the customer.

When a performance obligation is satisfied—either over time or at a point in time.

It’s when cash is received before delivering the good or service; recognized as a liability until the performance obligation is satisfied

IFRS 15 uses 'contract liability' instead of 'deferred income,' but both refer to income received before performance.

credits revenue, debits a contract asset if not yet invoiced.

Accounted for in accordance with IFRS 9; any impairment loss reduces the asset and is charged to profit and loss.

It means recognizing the substance of a transaction over its legal form. For most businesses, the commercial substance and legal form of a transaction are the same, but substance should be followed if they differ.

It's when a dealer has the right to return unsold inventory to the manufacturer within a specific period. Legal title remains with the manufacturer until a certain event occurs (e.g., sale to a third party or the end of the period).

Revenue can be recognized either at the end of the specified period if the inventory is not returned, or earlier if the dealer sells the inventory to a third party.

The manufacturer holds the risk of inventory becoming obsolete and unsold until certain criteria are met.

A sale and repurchase agreement (repo) is a short-term borrowing arrangement commonly used in financial markets. It involves two linked transactions:

1. Sale

One party (usually a bank or financial institution) sells securities—often government bonds—to another party and receives cash.
To the seller, this functions like a loan secured by collateral.

2. Repurchase

At the same time, the seller agrees to buy back the same securities at a later date (often the next day or within a week) at a slightly higher price.
The difference between the sale price and the repurchase price is effectively interest, called the repo rate.

The substance of the transaction over its legal form—often, such agreements are loans against an asset, not genuine sales.

Accrue interest expense (e.g., 10% of 2.4 million = 240k), debit finance cost in P&L, credit accruals (liability).

Risks and rewards of changes in property value remain with the seller

The property remains on the balance sheet at cost, the proceeds are recognized as a loan, and annual interest is expensed.

It occurs when a manufacturer delivers to a dealer, but the manufacturer retains ownership until the products are sold to third parties.

Whether the risks and rewards of ownership have been transferred from the manufacturer to the dealer.

The manufacturer retains the risks.

That the transfer of risks and rewards may have occurred at delivery, supporting recognition of a sale.

The right to return at any time without a penalty.

IFRS 15 (“Revenue from Contracts with Customers”).

Recognizing revenue and profit based on how much of the contract is completed, either by costs incurred or work certified.

Input method uses actual costs compared to estimated total costs. Output method uses work certified by a surveyor as complete.

Only when the outcome can be estimated with reasonable certainty; if not, revenue equals costs (no profit recognized).

They are not revenue until the related work is performed.

Amounts due from customers = asset; amounts due to customers = liability.

The full expected loss is recognized as soon as it’s identified.
You still use the % of work completed for revenue figure, use the whole loss figure for project and then calculate the cost of sales as the balancing figure between the 2

times the total sales value by the discount factor