Question

Can you explain the all event test? Assume a company enters into a contract for a...

Can you explain the all event test?
Assume a company enters into a contract for a 1,000,000 dollar product. the company paid the full 1,000,000 in December of 2019, and will deliver the product in Feb 2020.
when do you recognize gross income?
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Answer #1

According to the IFRS criteria, for revenue to be recognized, the following conditions must be satisfied:

  1. Risks and rewards of ownership have been transferred from the seller to the buyer.
  2. The seller does not have control any longer over the goods sold.
  3. The collection of payment from goods or services is reasonably assured.
  4. The amount of revenue can be reasonably measured.
  5. Costs of revenue can be reasonably measured.

If the above conditions are satisfied then the income can be recognised on Dec 2019,

In case if it is not possible ,then the income can be recognised only on Feb 2020

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