Yakub02
Banned
Amortisation and impairment An asset for contract costs recognised in accordance with this standard must be amortised on a systematic basis consistent with the transfer to the customer of the goods or services to which the asset relates.
The amortisation must be updated to reflect a significant change in the entity’s expected timing of transfer to the customer of the goods or services to which the asset relates.
An impairment loss must be recognised in profit or loss to the extent that the carrying amount of an asset recognised exceeds:
the remaining amount of consideration that the entity expects to receive in exchange for the goods or services to which the asset relates; less
the costs that relate directly to providing those goods or services and that have not been recognised as expenses. When the impairment conditions no longer exist or have improved a reversal of the impairment loss is recognised.
This will reinstate the asset but the increased carrying amount of the asset must not exceed the amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously.
Presentation This section explains how contracts are presented in the statement of financial position.
In order to do this it explains the double entries that might result from the recognition of revenue. The double entries depend on circumstance.
An unconditional right to consideration is presented as a receivable. The accounting treatment to record the transfer of goods for cash or for an unconditional promise to be paid consideration is straight forward.
The amortisation must be updated to reflect a significant change in the entity’s expected timing of transfer to the customer of the goods or services to which the asset relates.
An impairment loss must be recognised in profit or loss to the extent that the carrying amount of an asset recognised exceeds:
the remaining amount of consideration that the entity expects to receive in exchange for the goods or services to which the asset relates; less
the costs that relate directly to providing those goods or services and that have not been recognised as expenses. When the impairment conditions no longer exist or have improved a reversal of the impairment loss is recognised.
This will reinstate the asset but the increased carrying amount of the asset must not exceed the amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously.
Presentation This section explains how contracts are presented in the statement of financial position.
In order to do this it explains the double entries that might result from the recognition of revenue. The double entries depend on circumstance.
An unconditional right to consideration is presented as a receivable. The accounting treatment to record the transfer of goods for cash or for an unconditional promise to be paid consideration is straight forward.
