Comprehensive Report on Revenue Recognition and IFRS 15 Compliance

This report examines the application of IFRS 15, focusing on revenue recognition from contracts with customers. It begins with an introduction to IFRS 15 and its importance in financial reporting. The main body of the report details the five-step model outlined in IFRS 15, including identifying contracts, performance obligations, determining transaction prices, allocating transaction prices, and recognizing revenue. The report analyzes a case study involving MK Limited and Stobe Inc., assessing whether the transactions meet the accounting requirements of IFRS 15. The conclusion summarizes the findings, confirming that the companies have followed IFRS 15. The report references relevant academic sources, including journal articles and books, to support its analysis and conclusions. Overall, the report provides a comprehensive overview of IFRS 15 and its practical application in revenue recognition.

Contract with customer
revenue

Table of Contents
Introduction......................................................................................................................................2
Main body....................................................................................................................................2
Conclusion.......................................................................................................................................3
References........................................................................................................................................4
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Introduction
The entire report focuses on Revenue from contracts with customers (Kohler and et.al 2021).
IFRS 15 states about the revenue which is required to provide financial statement to the
company.
Main body
As the tender for the audit services has been issued by MK Limited and the tender document has
been submitted within the given timeframe. But the appointment of auditors have to be approved
by the committee of MKO (Pty) Limited. This committee has to look for the text calculation of
the payment is made to SARC. The overall question arises is that the transaction which held
between Limited and Stobe inc meet all the accounting requirements of IFRC 15 which is
revenue from contract with customers or not. IFRS 15 speaks about the necessity of information
about revenue because it is important for making financial statement and provide more
informative information. This works on five step model principles to create contact with
customers. The main objective of IFRS 15 is to create and set various principles that all the
entities should apply to create report and useful information about the financial statement which
includes nature amount timing and also various cash flow which has been generated by
contacting with the customer. The 5 steps of IFRS 15 is mentioned below:
Identification of the customer within the contract
The entire contract which has been made between the company and the customer should be fall
under the IFRS 15 act and all the necessary criteria of this act should be met. Contract should be
approved by both the parties from customer and from the company as well. Both the parties
should be concerned with the goods and services to get transferred between each other and the
contract must have commercial substance. Apart from this both the parties should fulfil their
obligations.
Identification of the performance-obligation within the contract.
At the Inception of the contract all the entity whether it is goods and services should be delivered
properly to the customer. The goods which have been delivered by the company must satisfy the
customer.
Determination of transaction price
Price of goods and services will be exchanged between client and the company after exchanging
the production services. Price should not be so high and so low. Variable consideration should be
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mentioned in the entire deal as per the IFRS 15. Variable consideration can be present in the
form of debate discount and price concession.
Allocation of transaction price
When the contract have more than one performance of application then the allocation of
transaction price take place as per the IFRS 15 (Trabelsi 2018). This is being used to adjust
market assessment approach also the Margin approach for the company. This auto uses the
production of goods and services and also the value of assets for the perspective of customer and
for the company as well.
Reorganization of revenue and fulfil the performance of application
All the revenue must be recognised by the entity from point of time it will let them know how
much assets have been reduced in how much have been used and how much is still pending to
sell.
So it can be seen that IFRS 15 has been followed by both the companies.
Conclusion
After analysing the entire report it can be concluded that IFRS 15 act has been followed by
companies.
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References
Books and Journals
Kohler, H., Pochet, C. and Le Manh, A., 2021. Auditors as intermediaries in the end ogenization
of an accounting standard: The case of IFRS 15 within the telecom
industry. Accounting, Organizations and Society, p.101227.
Trabelsi, N.S., 2018. IFRS 15 early adoption and accounting information: Case of real estate
companies in Dubai. Academy of Accounting and Financial Studies Journal. 22(1).pp.1-
12.
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