- Financial Accounting
- Revenue Recognition
In order to record revenue, there is a specific accounting standard called IAS 18 Revenue Recognition. There is a complete guide as when to record revenue from the sale of goods, rendering of services and the receipt/ collection of royalties, dividends and interest.
Sale of Goods
In order to recognize the revenue from sale of goods, following conditions must be fulfilled:
- the significant risk and rewards of the goods have been transferred to the purchaser of the goods,
- the amount of revenue can be measured with sufficient reliability,
- the seller of the goods does not hold any control over the goods once it is sold,
- there is a significant probability that the buyer of the goods will pay for the goods,
- the cost of the goods can be measured reliably for the seller.