Revenue recognition IFRS15

ABC Ltd. has invoiced Rs. 100,000 to the customer PQR Ltd in advance for 10 months in Apr 19 of which services worth Rs. 20,000 have been delivered. Another invoice for services worth Rs. 30,000 delivered to XYZ ltd. is missed for invoicing. On the supplier side, KYD Ltd has raised a service order of Rs. 70,000 worth to ABC Ltd of which an invoice amounting to Rs. 30,000 has been received in advance. How much would be the net margin impact (assuming 50% of revenue is cost of sales) and net working capital for the month of Apr19 (assuming cash is not collected or paid for any of the invoice).. Single choice.

Option 1 - Margin Rs. 30,000 and Net Working Capital 50,000

Option 2- Margin Rs. 25,000 and Net Working Capital 50,000

Option 3- Margin Rs. 10,000 and Net Working Capital 50,000

Option 4- Margin Rs. 25,000 and Net Working Capital 30,000

Replies (4)
Quick Summary
This discussion explores the complexities of IFRS 15 revenue recognition for ABC Ltd. It presents a scenario involving advance invoicing, delivered services, and un-invoiced work, alongside supplier transactions. The core question is how to calculate the net margin and net working capital impact for April 2019, considering the specifics of revenue recognition under IFRS 15 and whether revenue is recognised upfront or as deferred income.

Did they recognise revenue for whole 100000 or raised deferred income liability? 

Did they recognise revenue for whole 100000 or raised deferred income liability? 

It's not possible to get it. Information is nadequate. For example 

Dr. Bank 50

Dr. Receivables 50

CR. Sales 100

Because 50k worth transactions occured. That's accrual form of contract. For a different type of contract, it will become like 

Maybe to complicate things, 

Dr. Bank 100

CR. Sales 50

Cr. Deferred revenue 50 

Considering the cutomer paid of all the amount upon invoice. It's funny and brain teasing. 

 

 

 

 

Ss relingh

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