Question

Discuss the five conditions that need to be met for the recognition of sale of goods.

Answer 1

When a revenue from sales is recorded i.e when a revenue is recorded

For that we have IFRS has outlined specific conditions

Revenue should be recorded

when the ownership i.e risk ans rewards has been transferred from seller to the buyer

Seller should not have control over the goods that are sold to the buyer

collection of payment from that sale is reasonably assured

the amount of sale of service or goods is reasonably measured

cost of revenue is reasonably measurable

first two conditions are related to perfomance next is related to collectibility and last two are related to and measurability