International Financial Reporting Standards They are commonly known as IFRS. These are set of accounting standards which are developed by independent (Non-profit) organization called as International Accounting Standards Board (IASB). These are universally accepted set of standards which state the rules and standards for accounting at global level. Revenue recognized point of long term contract A long-term contract qualifies for revenue recognition over time. The seller can recognize the revenue as per percentage of the completion of the project, which is recognized as revenue minus cost of completion until date. If a contract does not meet the performance obligation norm, then the seller cannot recognize the revenue till the project is complete. Cost recovery method: Under the cost recovery method, gross profit is recognized when the cost of the sales is recovered. Where there is an extremely high degree of uncertainty in the installment sales, then this method can be used. To determine: The amount of revenue, cost and gross profit or loss to be recognized in each of the three years under IFRS, assume the using of percentage-of-completion method is not appropriate (Cost recovery method).

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Chapter 5, Problem 5.31E

To determine

International Financial Reporting Standards

They are commonly known as IFRS. These are set of accounting standards which are developed by independent (Non-profit) organization called as International Accounting Standards Board (IASB). These are universally accepted set of standards which state the rules and standards for accounting at global level.

Revenue recognized point of long term contract

A long-term contract qualifies for revenue recognition over time. The seller can recognize the revenue as per percentage of the completion of the project, which is recognized as revenue minus cost of completion until date.

If a contract does not meet the performance obligation norm, then the seller cannot recognize the revenue till the project is complete.

Cost recovery method:

Under the cost recovery method, gross profit is recognized when the cost of the sales is recovered. Where there is an extremely high degree of uncertainty in the installment sales, then this method can be used.

To determine: The amount of revenue, cost and gross profit or loss to be recognized in each of the three years under IFRS, assume the using of percentage-of-completion method is not appropriate (Cost recovery method).

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