BAO2203 Corporate Accounting: Revenue Recognition Report for Companies

This report addresses the application of AASB 15, the new revenue recognition standard, to TPG Telecom Ltd, Metcash Ltd, and National Australia Bank Ltd. It begins with an executive summary outlining the report's focus on the five-step revenue recognition model, and its application to the mentioned companies. The report then delves into the specifics of AASB 15, including its objective, core principle, and scope, explaining the five-step model in detail. It also covers transition and effective dates, the impact of the standard, and disclosure requirements. The report then provides individual analyses for each of the three companies, suggesting specific revenue recognition policies. The report concludes with a comparison of income under the Conceptual Framework for Financial Reporting and revenue under AASB 15, focusing on definitions and recognition criteria.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The report is framed to give an overview about the revenue and recognition as per the new
standards of AASB 15. The report gives the explanation on the five stage of revenue model.
For the depth understanding of revenue reorganization the report is addressed to board of
director of TPG Telecom Ltd, Metcash Ltd and National Australia Bank Ltd suggesting to
apply the revenue model. Later, the key difference between the definition and recognition
criteria for income under the Conceptual Framework for Financial Reporting and revenue
under AASB 15.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................4
Five Step Reorganization Revenue Model.............................................................................4
Transition and effective date..............................................................................................5
Standards effect on.............................................................................................................5
Explanation of the model...................................................................................................5
Disclosure requirements.....................................................................................................6
Business need help with AASB implementation...............................................................6
TPG Telecom Ltd...................................................................................................................6
Metcash Ltd............................................................................................................................7
National Australia Bank Limited...........................................................................................8
Part B..........................................................................................................................................9
Difference between ‘income’ under the Conceptual Framework for Financial Reporting,
and ‘revenue’ under AASB 15...............................................................................................9
Definition...........................................................................................................................9
Recognition Criteria-..........................................................................................................9
Conclusion................................................................................................................................10
Reference:................................................................................................................................11

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Introduction
The gross inflows of cash, other consideration, receivables that is been arising in the
development of the common activities of an entity from selling of goods, providing facilities
also from the sources that fetches royalties as well as dividends the amount that is collected is
called revenue. The principle that helps in recognition of revenue is concluded from the
concept of accrual along with the matching concept. The principles indicates that
identification of revenue prevails there where rewards as well advantage is related to the
selling of item as well as facilities that is being provided is transported, where the sum can be
projected consistency and once the sum is understood or attainable, no substance when cash
is being acknowledged or will be acknowledge. It is mostly troubled with the judgement of
acknowledgement of income in the declaration of profit and loss of an innovativeness. It
regulate the secretarial period, in that incomes along with expenses are predictable. The
report is addressed on the Revenue reorganization in accordance with AASB 15 to the board
of directors of TPG Telecom Ltd, Metcash Ltd and National Australia Bank Ltd.

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Discussion
Five Step Reorganization Revenue Model
Many corporations are in good health on the way to identifying income from
agreements with clienteles under a completely new framework in accordance with AASB 15.
The operative date of the amended law was 1 January 2018, so your secretarial systems,
procedures and agreements should now be outfitting for these fluctuations. AASB 15 swift
below clarifies the different standard.
AASB 15 smears to all arrangements with clienteles, excluding for agreements
enclosed by other Standards, such as leases, insurance as well as financial instruments. AASB
15 was presented to match with intercontinental reporting necessities, overwhelmed faintness
in the preceding income values, bring more precise saleable financial reporting along with a
solitary revenue acknowledgement model for depositors to recognize and associate the
proceeds of dissimilar companies. AASB 15 specifies in what way and at what time proceeds
is recorded, necessitating entities to offer consumers of financial statements through more
material and reporting revelations. Its core standard is the acknowledgement of income for
the transmission of belongings or amenities, at a price that replicates the deliberation to
identification of
contract with the
customer
identifying the
obligation for
performing the
cost
Transaction cost
Allocating the
cost of
performing the
obligation
Recognize the
revenue after
satisfying the
obligation of
revenue.

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which the individual supposes to be enabled, in coming back for assembly presentation
requirements.
Transition and effective date
AASB 15 mandatorily smears to annual reporting phase’s commencement on or after
1 January 2018, with the company’s yearend responsible the principal retro appropriate:
The company financial year ending on 31st December that shall apply the standard
from 1st January 2018, and whose year end is 30th June would apply the standard from 1st July
2019.
Standards effect on
AASB 15 will have the maximum impression on productions which comprise:
 Hurried produces as well as facilities
 Important guarantees and refunds
 Inconsistency in income collectability from agreement to agreement
 Agreements where deliberation differs
 Renegotiation of choice or contemplation of agreements.
Explanation of the model
Fundamentally, an entity shall assess the likelihood of in receipt of consideration in
conversation for the properties or facilities providing, captivating into interpretation the
clients’ aptitude and purpose to pay together with concessions, refunds, reimbursements,
value reductions, inducements and presentation pluses. The business price must be owed to
the presentation responsibilities grounded on the amount of their comparative opinion-
unaided values. Stance-alone value is the worth at that an object will retain the assured goods
or facility distinctly to a purchaser. Costs to achieve an agreement with a client that are not

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inside the possibility of some additional Normal are permissible to be exploited and repaid.
(Benston Bromwich and Wagenhofer, 2006)
Disclosure requirements
All entities reporting concluded over-all purpose financial statements shall imagine
amplified stages of revelation. Under AASB 15 revelation objects, an object must reveal
adequate evidence to permit users of financial statements to comprehend the nature, sum,
judgement and indecision of income as well as cash flows ascending from bonds with
clienteles. ( Kosinskiy, Merkuryev and Medvedev, 2016)
Business need help with AASB implementation
Corporations who were well-equipped for AASB 15 will have to adopt an alteration
approach – reflective or increasing effect – thriving beforehand the real date. Though, certain
industries might not had the essential services and capitals in-house for application.Auditors
suggests their clients with AASB application and the request of additional Australian
Accounting Standards. The scope of AASB 15, said that a company shall apply with the
standard to all the contractors along with the customer only except contracts regarding lease,
insurance, non-monetary charges that the companies are working in the same industries.
TPG Telecom Ltd
TPG Telecom Limited (‘TPG’, ‘the Company’) is the eventual parent corporation of a
group of businesses operational in the telecommunications industry. The Business is
disclosed on the Australian Securities Exchange. Its head workplace is in Sydney at
Australia. The Group’s primary processes are in Australia wherever it has prevalent
telecommunications system substructure and concluded two million consumers, but it is also
presently in the procedure of construction a portable network in Singapore. The Group has

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above 5,000 employees established in Singapore, Australia, the Philippines and New
Zealand. (Tpg.com.au. 2019).
The company apply AASB 15 for recognizing it revenue. It is suggested that the
company shall adopt the five step revenue model as it is mandatory for the company. The
Company has identified the contracts with VHA fibre. This had provided to increase the
revenue growth in the company. The company also signed an agreement with Adelaide City
so that it can connect with the network in order to deliver the 10Gbps of speed. The consumer
segment of the company revenue was $7.0 million in the year 2017. This was termed as one-
off revenue. This lead in the growth of EBIDTA of the company. As the company recorded
the transaction in accordance with the amended AASB 15. The cost of consumer merger
acquisition that arises on procurement consumer contracts would whichever form part of the
total contract price. The cost of sales would be capitalised as agreement cost. The impact of
the changes was seen in the financial year 2018 was revenue, employee benefit, intangible
amortisation is higher.
Metcash Ltd
Metcash Limited is a company which is grouped under public company. The
company is ranked as 26th among the two thousand top companies at Australia. The majority
income of the company is being derived from Grocery, Tobacco, and liquor product. These
are wholesaling in the industry. In 2018 the business produced total revenue
of $14,562,900,000 together with sales along with other revenue. In 2018 Metcash
Limited had 6378 staffs in Australia together with workers from all holdings under the
company's regulator.
The Chief Executive is Mr Jeff Adams whose authorised title is Group Chief Executive
Officer. The Chairman of Metcash Limited is Mr Robert Murray whose official title is Non-

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Executive Chairman. The combined object divides its processes into three main segments.
( Mars-metcdn, 2019)
The amended of AASB 15 is applicable to Metcash from the financial year 2019.
After the adoption of new standard of AASB 15 the changes that will occur in price through
sale. Here consumers would directly receive goods from the suppliers.
Accordingly, upon acceptance of AASB 15, custody-finished sales might be described
on a net “command” base, that would outcome in a decrease of about $2 billion of income.
This performance alteration will consume no influence on uncultured income or remaining
revenue. Additional variations there might be other organisation and performance variations
amid income and additional appearances within unrefined income. These performance
variations are not probable to have an important impression on uncivilized profit or net
income.
National Australia Bank Limited
In the year 1982, National Australia Bank was formed with the name of National
Commercial Banking Corporation of Australia in way of merger of Commercial Bank of
Sydney and National Bank of Australia. This bank is the fourth largest financial institution
providing market capitalization, proceeds as well as consumers. In year 1992, bank acquire
Bank of New Zealand in 26 percent market share. In November 2014, bank operated with
1590 branches along with service centre. With 4412 ATMs it is serving 12.7 million
consumers across New Zealand, Australia and Asia. (Nab.com.au. 2019).
NAB bank had introduced one principle that is based on the five step model in order
to recognize the revenue also introducing the concept of recognizing revenue as an obligation
of a consumer is satisfied. It was stated in the annual report that the Group would adopt
AASB 15 from 1st October 2018. Straggling commands are the principal revenue brook

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wedged by the changeover to AASB 15. The Group unwavering that it has no utilitarian
current recital responsibility in deference of rambling commands and consequently is
essential to assess the present value of rambling commands it is permitted to gather and
distinguish that estimation as a agreement asset. The agreement asset in addition the
modification to retained earnings are not substantial to the Group's fiscal statements. No other
substantial transition modifications were recognized.
Part B
Difference between ‘income’ under the Conceptual Framework for Financial
Reporting, and ‘revenue’ under AASB 15.
Definition
Income is rise in monetary paybacks throughout the accounting period in the
procedure of influxes or improvements of assets or reductions of liabilities that outcome in
rises in equity, other than persons connecting to charities from equity contributors.
Income can comprise both revenue as well as gains even still they may be comprised
in equity moderately than the declaration of comprehensive income for instance a revaluation
surplus. An instance of an involvement from contributors is the acquisition of supplementary
shares.
Revenue is defined as the proceeds that is been generated through the ordinary
activities in the usual course of an entity. (McCarthy and McCarthy, 2014). The revenue that
is being recognized under AASB 15 is from the sale proceeds of the asset.
Recognition Criteria-
As per para 4.47 of Conceptual Framework for Financial Reporting income is identified in
the income statement where there is an increment in upcoming monetary advantage related to
an increment in an asset along with decrease in liability has increased that can be measured

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relevantly. This means, in result, that acknowledgement of income happens concurrently with
the recognition of upsurges in assets or reductions in obligations for example, the net upsurge
in assets rising on a sale of goods or facilities or the reduction in liabilities arising from the
renunciation of a debt owed.
Revenue Recognition under AASB 15
Firstly the contract along with a customer shall be identified. Identified the separate problem
in the agreement. Decision regarding the transaction of price. After that price regarding the
transaction is being allocated so that he obligation regarding the contract is obligated. After
satisfying the obligation revenue is being recognised. (Marton and Wagenhofer, 2010).
Conclusion
From the analysis of fiscal report of National Australia Bank, Metcash Ltd and TPG
Telecom Ltd it conditional that group follow to purposes of conceptual framework of
reporting. Statistics as well as information obtainable in fiscal report allow operators to
improve their choice making competence. The fundamental values of monetary reporting
carries clarity around financial material. Reports obtainable is demonstrable and permits
witnesses to reach a agreement. Comparability of info has been attained due to reliable
request of secretarial principle and accepting of conceptual framework. Though, there is no
explicit and graphical exhibition of evidence that types announcement stand slightly uneasy.
In this esteem, graphical performance of material would support employers in tranquil
reasonably and judicious performance of material. Consequently, it can be decided that
society follow to purposes of theoretical agenda of reporting. The report is about how the five
step model plays it role in recognition of revenue.

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