Steve Collings addresses some of the more contentious issues surrounding revenue recognition.
The concept of revenue recognition can be a complex issue and in recent years has been the subject of some high profile accounting restatements, particularly in the US. Undeniably, there can be a temptation to manipulate revenue for various reasons and it is for this reason that standard setters are particularly keen on the principles of revenue recognition. In addition, there can sometimes be considerable tax implications if revenue is inappropriately recognised or if it is deferred inappropriately.
Revenue recognition is dealt with in IAS 18 ‘Revenue’, Application Note G (ANG) to FRS 5 ‘Reporting the Substance of Transactions’ and in FRSSE. For the purposes of this...
About Steven Collings
Steve Collings, FMAAT FCCA is the audit and technical partner at Leavitt Walmsley Associates Ltd where Steve trained and qualified.