Revenue Recognition

Revenue Recognition

Abstract
Three separate reports have been prepared for TPG Telecom Ltd, Metcash Ltd and National
Australia Bank limited by following the new Australian Standard AASB 15 Revenue from
Contractors with Customers. It includes the core principles, objectives and scope of AABS 15
for these three organisations. The reports also describe the implementation of the five-step
model to recognise revenue in AASB15for three different companies that are from different
industries. It also includes the differences in definition and recognition criteria for ”income”
and “revenue”.
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Table of Contents
Abstract.................................................................................................................................................1
Introduction...........................................................................................................................................3
Literature Review..................................................................................................................................3
Part A................................................................................................................................................3
TPG Telecom Ltd..........................................................................................................................3
Metcash Ltd...................................................................................................................................4
National Australia Bank Ltd..........................................................................................................6
Part B.................................................................................................................................................7
Definition of income......................................................................................................................7
Recognition criteria for income.....................................................................................................7
Definition of revenue.....................................................................................................................8
Recognition criteria for revenue....................................................................................................8
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9
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Introduction
AASB 15 Revenue from contracts with customers has replaced its existing accounting
instructions and introduced a model for revenue recognition focusing on upgrading the ability
to compare revenue identification operations across industries, practices, capital markets and
jurisdictions. It has changed the financial reporting and the way that entities use to recognise
revenue (Aasb, 2014). Significant changes to the financial reporting have been noticed after
the adoption of IFRS and these changes are being represented by AASB 15 with AASB 16,
AASB 9, Lease and Financial instruments. The changes seem to be complex and affecting the
accounting treatment. Most of the entities are facing challenges while preparing their
financial statements by following the latest accounting standards.
Literature Review
Part A
TPG Telecom Ltd
Revenue Recognition Policy
The revenue recognition policy of TGP should consist of revenues related to the
telecommunication services provided to the corporate, wholesale customers and consumer.
The organization has different telecommunication services plans that are operated on many
networks and utilizes a number of multi-level subsystems and automated billing systems for
recognizing revenue. AASB 15 should be applied for the recognition of revenue (TPG, 2017).
The revenue policy should examine bill revenue streams, average revenue per user, revenue
from major customers and corporate and new plans. The estimation and depiction of true
revenue value are considered to be very much important for the organization.
Objective, core principle and scope
AASB 15 main objective is to provide useful information to the stakeholders about the
amount, uncertainty, timing and nature of cash flows and revenue arising from the contract
with the customer. TPG has to recognize revenue for depicting the transfer of the services or
products to the customers. The revenue needs to be recognized associated with the
telecommunication services that are being provided to the corporate, wholesale customers
and consumer.
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