New User? Start here.
Error goes here
Please upload all relevant files for quick & complete assistance.
The topic chosen for the discussion is the “Revenue” and the Company chosen to showcase its disclosure is the Ford Australia. The AAS 15 is also chosen as the standard to deliberate on the requirements of measurement and recognition of revenue as well as the disclosure. The AAS 15 presents a comprehensive information on how revenue should be measure and recognized. According to AAS15, the revenue has to be measured in Fair Value (FV) of consideration as well as contributions received as well as receivable. AAS 15 also provides that recognition should be done where gains of economy will accrue to the business. Ford Australia has complied with AAS 15 disclosure requirements. It has revealed information on revenue from royalty, commodities, rents, as well as interest.
Requirements of Recognition and Measurement
These two revenue requirements are based on AAS 15 “Revenue”. In paragraph one of the AAS 15, it is applicable to the all-purpose reports that are financial-base of every unit that report to which the ‘Accounting Standards’ (AS) functioning as outlined in Corporation Law is inapplicable (Bruhn and Miller 2014). The AAS 15 is also applicable to the reports which are classified as all-purpose financial reports by a non-reporter unit, and to which the AS functioning under the Corporation Laws are inapplicable. As reflected in paragraph 2 (scope) of the AAS15, the Standards is applicable to all the revenues including those revenues emerging from, selling goods, offering services, forgiveness of liabilities, contribution of assets, disposal of assets except goods as well as revenues of an entity when used by other people which yield rents, royalties, dividends, and interest (Colson et al. 2010). However, AAS15 is inapplicable to the proceeds drawn from securitisation of such properties as receivable factoring and deb defeasance. It does also apply to the measurement of properties and obligations at present or market values. It does not apply to recognizing the alteration in such values in the profit as well as loss or other operating statement when they happen. AAS 15 does not apply as well to the dividends from the units that are accounted for utilizing the equity method in compliance with the AAS 14 “Accounting for Investment in Associates” (Schulzke 2013).
In par. 5, this it provides (para. 5.1) that the measurement of revenues be undertaken at their fair value of both consideration as well as contributions received as well as receivable (Moerman 2012). It provides that revenue emerging from business be normally ascertained via an agreement between a company and its customers. It is examined using the ‘fair value (FV)’ of the ‘contributions’. It is also estimated based on the consideration ‘receivable’ while considering the amount of both discounts given in exchange as well as refunds allowable by a firm.’ A ‘consideration’ is often given in terms of cash a ‘receivable’. Nevertheless, where the inflow of cash or its equivalents as well as cash equivalents are late, the consideration’s fair value may fall below the cash receivable nominal amount (Ruder, Canfield and Hollister 2004). In paragraph six which describes the recognition of both disposal and selling of product, the AAS15 provides that the revenue is emerging from the sale of goods and disposal of other assets be recognized solely where, certain condition are met (Fisher 2014). A condition is that a business has to meet the regulation of goods alongside supplementary assets to consumers. Also it has showcase likelihood that the benefits of economy encompassing consideration will stream to businesses. The last condition to be satisfied is that the revenue amount has to be reliably measured for it to be recognized (Herz and Petrone 2004). The determination of revenue level is always achieved through estimating as well as succeeding amendment of approximations.
However, in supreme cases, the utilization of the assessment methods will offer measurements that are adequately trustworthy to allow it to be recognized. Such an amount of revenue, in rare occasions, may fail to be measured dependably and hence it will not be recognized pending the criterion satisfaction. Paragraph (6.1.4) of the AAS 15 indicates that the revenue will be recognized where it is possible that the economic welfares linked to the operation will accrue to the firm. In certain occasions, this may fail to happen pending the receipt of consideration or unless the uncertainty is eliminated. In cases where uncertainty emerges about the collectability of the amount of the revenue already recognized, the “uncollectable” amount of revenue or the sum in regards to which retrieval has halted to be likely is recognized as expenses instead of as a modification of the revenue amount initially recognized. This case is different from the one in which the revenue is assessed and subsequently modified upwards or downwards depending on more dependable data especially when revenue from the selling the mineral is approximated precedes the eventual examination. An alteration is viewed as a modification to the levels of revenue after recognition.
In paragraph 7 of the AAS 15 (rendering of services), the Standards provides a condition for recognizing the revenue drawn from the contract outcome based on reliable estimation. As provided for in paragraph 7.1 the AAS 15provides that in case an outcome of a contract to offer certain facilities can be reliably projected, the revenue emerging from such a contract has to be recognized by inferring to the phase of conclusion of the agreement when, and only when; all these subsequent benchmarks are met. Firstly, a business must control the privilege to be compensated after offering services. Another condition is that it must be probable that the economic gains including the compensations will be flowing to the firm, and lastly, the amount of revenue has to be reliably measured (Starczewski and Ingersoll 2013). The phase of the conclusion of any deal must also be dependably estimated for these income ascending from service provision to be recognized. Proportion of completion mechanism is used in recognizing proceeds by reference to the achievement of transactions stage. Where such a mechanism is utilized, reporting phases recognize service provision.
The entity provides essential information when determining the revenue under this method on the degree of the service action as well as presentation during the era of reporting. As provided for in paragraph (7.1.2) of the AAS 15, the revenue arising from rendering a service will solely be recognized where it is likely that the economic gains connected to the transaction will flow to the firm. In this case, the recognition will include the recognition of revenue that emerged in the previous which was never beforehand recognized because of unfavorable likelihood assessment. Nevertheless, where the uncertainty emerges regarding the “collectability” of the sum already recognized as revenue initially, the “uncollectable” quantity or the sum in regards to which the retrieval has stopped to be likely, will be recognized as expenses, instead of as a modification of the revenue amount initially recognized. For such revenue from rendering service to be recognized, the firm has to reliably examine once it is concurred with the parties to the deal based on the following conditions. Individual’s enforceable privileges linked to services must be given as well as received by all the participants. Consideration must be swapped, while payment conditions and means must be consented to.
Paragraph eight details condition in which for recognizing rents and dividends. It also provides the information on circumstances under which royalties and interest are recognized. Paragraph (8.1) provide that revenues which are emerging from the utilization of the firm’s assets that yield rents, royalties, dividends or interest be recognized in compliance with the paragraph (8.2) when, and only when certain conditions are met. Businesses have to control rights regarding consideration payable for the ventures as well as asset provision. Again, it has to be likely that gains in economy encompassing “consideration” will accrue to companies. Moreover, revenue levels must be estimated reliably (Lamoreaux 2012). The recognition of rent revenue must reflect AAS 17 and that the interest revenue has to be recognized on a time proportionate foundation which considers the actual yield on the financial property. Royalty revenue has to be recognized on an accrual framework in compliance based on pertinent contract whereas the revenue from the dividend has to be recognized where the right of the firm to receive payment is created.
Measurement and Recognition Disclosure
The Company that this paper discusses is the Ford Australia, a motor vehicle multinational corporation. The review of the current status of financial reporting of the Corporation shows compliance with AAS 15’s provision on revenue disclosures (Schaub 2004). The firm has disclosed the policies of accounting embraced for the revenue’s recognition alongside the methods embraced in the determination of the stage of completion of contracts which involve the rendering of services as provided for in paragraph 12. The company has also complied with the provision of paragraph 12.1 (b) of the AAS 15 by disclosing the value of individual classification of revenue recognized throughout the reporting time alongside selling goods (vehicles), and offering services. Ford Australia has also recognized asset contribution (both cash alongside non-cash monetary properties). The corporation’s financial reporting has also adhered to the provision of paragraph 12.1 (c) by disclosing the revenue volume emerging from trade in commodities integrated into the revenue category.
The company is also in compliance with paragraph 12.2 (both a. and b.) of AAS 15 by disclosing the information regarding the revenues arising from the internal operating activities and outside the operating activities respectively (Ahmed and Alam 2012). The Corporation has also adhered to the paragraph 13 of AAS 15 (comparative information) by disclosing the necessary information for the previous conforming report duration that matches the needed disclosures by AAS 15 for the present reporting period.
Ahmed, K. and Alam, M., 2012. The effect of IFRS adoption on the financial reports of local government entities. Australasian Accounting, Business and Finance Journal, 6(3), pp.109-120.
Bruhn, A. and Miller, M., 2014. Lessons About Best Interests Duty. Australasian Accounting Business & Finance Journal, 8(4), p.23.
Colson, R.H., Bloomfield, R.J., Christensen, T.E., Jamal, K., Moehrle, S.R., Ohlson, P., James, A., Penman, S.H., Previts, G., Stober, T.L. and Sunder, S., 2010. Response to the Financial Accounting Standards Board's and the International Accounting AAS 15Board's Joint Discussion Paper Entitled,'Preliminary Views on Revenue Recognition in Contracts with Customers'. Accounting Horizons, 24(1), pp.2013-682.
Fisher, K., 2014. A New Model for Revenue Recognition: Key Changes to Generally Accepted Accounting Principles. Available at SSRN 2438118.
Herz, R.H. and Petrone, K.R., 2004. Internaitonal Convergence of Accounting Standards-Perspectives from the FASB on Challenges and Opportunities. Nw. J. Int'l L. & Bus., 25, p.631.
Lamoreaux, M.G., 2012. A new system for recognizing revenue. journal of Accountancy, 213(1), p.30.
Moerman, L.C., 2012. Book Review Buckley, R.(2011) Debt-for-Development Exchanges: History and New Applications. Australasian Accounting, Business and Finance Journal, 5(4), pp.145-147.
Ruder, D.S., Canfield, C.T. and Hollister, H.T., 2004. Creation of world wide accounting standards: convergence and independence. Nw. J. Int'l L. & Bus., 25, p.513.
Schaub, A., 2004. Use of International Accounting Standards in the European Union, The. Nw. J. Int'l L. & Bus., 25, p.609.
Schulzke, K.S., Berger-Walliser, G. and Marchini, P.L., 2013. Lexis Nexus Complexus: Comparative Contract Law and International Accounting Collide in the IASB-FASB Revenue Recognition Exposure Draft. Vand. J. Transnat'l L., 46, p.515.
Starczewski, L. and Ingersoll, B., 2013. Revenue recognition: Ten top changes to expect with the new standard. Bloomberg BNA, 1.
To View this & another 50000+ free samples. Please put
your valid email id.
Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.
Get Moneyinto Your Wallet
Total 8 pages
*The content must not be available online or in our existing Database to qualify as
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2017). Revenue And The Company. Retrieved from https://myassignmenthelp.com/free-samples/revenue-and-the-company.
"Revenue And The Company." My Assignment Help, 2017, https://myassignmenthelp.com/free-samples/revenue-and-the-company.
My Assignment Help (2017) Revenue And The Company [Online]. Available from: https://myassignmenthelp.com/free-samples/revenue-and-the-company[Accessed 26 May 2022].
My Assignment Help. 'Revenue And The Company' (My Assignment Help, 2017) <https://myassignmenthelp.com/free-samples/revenue-and-the-company> accessed 26 May 2022.
My Assignment Help. Revenue And The Company [Internet]. My Assignment Help. 2017 [cited 26 May 2022]. Available from: https://myassignmenthelp.com/free-samples/revenue-and-the-company.
The respective sample has been mail to your register email id
* $5 to be used on order value more than $50. Valid for
We have sent login details on your registered email.
At MyAssignmenthelp.com, we are committed to deliver quality assignment assistance in the fastest way possible. To make our service delivery fast, we have hired subject matter experts to work on different subject specific assignments. We have hired experts who owe in-depth knowledge in their respective subjects. As per their expertise, they provide geography assignment help, Physics assignment help, Strategic assignment help, history assignment help, art architecture assignment help and assistance with other subjects as well.
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Percentage increase in the Gross profit
Bellamy’s Australia Ltd posted a strong gross profit margin in 2016 as compared to the year 2015. An increment of 12.79% has been observed indicating a strong level of sales and strong control over the cost of goods sold. This ratio is a strong indicator of the performance and going by the result it can be said that the operations of the company are managed i...
The objective of this report is to assess how the capital market participants use operating lease in the off-balance sheet at the time of evaluation of the credit risks of the organizations. The study will focus on the risks that are associated with the operating lease. It will also focus on the accounting information and its treatment in the balance sheet with regard to the operating lease. From the economical aspect, th...
To: Mr. Sean Pitt
From: Research Analyst of Davis & Company
Re: Importance of Accrual Based Financial System over Cash Based Financial System
It is true that for operating a business efficiently, cash is the best alternative as this is the simplest and faster way for saving money. However, when a business is ran by “cash” only, the business comes with downsides. It has been found that ...
The oil leak in Gulf of Mexico fired up arguments which were against offshore drilling, which involves a mechanical process whereby a wellbore is drilled below seabed. The drilling operations have considerable effects that are negative on wildlife and marine. Among other important impacts of drilling that is a threat to sustainability is:
Water and Air pollution:
Drilling mud has use in lubrication and cooling of drill bit...
Unilever is a multinational company that manages more than 400 brands of FMCG and more than 12 leads to a humongous sale of more than €1 billion in a single year. The formation of Unilever can be traced to the year 1929 and the headquarters is based in Rotterdam, Netherlands. Unilever has various brands under its name such as Persil, Magnum, Sure, Axe, Lipton, etc. With innumerable brand, it got a strong r...
Get top notch assistance from our best tutors ! Excel in your academics & career in one easy click!
BAO2203 Corporate Accounting
ACCT6007 Financial Accounting Theory And Practice
ACCT 401 Advanced Accounting
ACCT 3010 Sustainability Accounting And Reporting
FACI4024 Financial Accounting
BAO3309 Advanced Financial Accounting
ACCG923 Accounting Standards And Practice
ACCT5942 Corporate Accounting And Regulation
ACCT 6344 Financial Statement Analysis
ACC5502 Accounting And Financial Management
Just refer 5 friends to earn more than $2000.
If you are the original writer of this content and no longer wish to have your work published on Myassignmenthelp.com then please raise the
content removal request.
After the successfull payment you will be redirected to the detail page where you can see download full answer button over blur text.You can also download from there.
Or you can also download from My Library section once you login.Click on the My Library icon
My Library page open there you can see all your purchased sample and you can download from there.
That's our welcome gift for first time visitors
On APP - grab it while it lasts!
*Offer eligible for first 3 orders ordered through app!
ONLINE TO HELP YOU 24X7
OR GET MONEY BACK!
OUT OF 38983 REVIEWS
Received my assignment before my deadline request, paper was well written. Highly