REVENUE.pptx - REVENUE MARIA DEVINA/1901470683 MAZELA...

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REVENUE MARIA DEVINA/1901470683 MAZELA MEYDRIANI/1901508083 MICHAEL ANDRI/1701299304
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Outline Revenue Defined Revenue Recognition Revenue Measurement Challenges for standard setter Issue for Auditor
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1.Revenue Defined Revenue definition based on IAS 18; Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflow result in increase in equity, other than increase relating to contributions from equity participants. Revenue strongly related to the gross increase Income encompasses both revenue and the gains. Revenue arise from: sales, fees, dividends, interests Assets received: cash, receivable, goods and services received in exchange, etc. 2 flows of business operation Monetary Flow Increasing the value of the firm, related to the flow of funds from the customers Physical Flow Involve producing and selling products of the firm.
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1.1 Behavioral View of Revenue Revenue: increase in total value of assets and capital other than additional investment. Revenue is the accomplishmen t and measure the entity’s gross performance, while expense indicates the effort made by the firm. Concepts of the revenue is related to the critical event of the firm, critical event different based on the nature of business: Example: -financial institution > giving loans - Manufacturing > sale of the product Earning Process: All activities undertaken by the firm to make profit Defining revenue is the first step before we know how to measure revenue in actual situation.
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2. REVENUE RECOGNITION 2.1 Historical Perspective - Revenue determined by the increase in net worth. - The use of specialized assets became significant between WW1 until 1930s, led to a notion that income should be realised. - In 1932 - Development of revenue recognition - The committee of the American Institute and the New York Stock Exchange supported the realisation criterion and rejected the assets appraisal method.
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2.2 Criteria of the Revenue Recognition
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