HKAS 18 RevenueHKAS 18 Revenue

Points to be DiscussedPoints to be Discussed

Objective of HKAS 18Objective of HKAS 18 Scope of HKAS 18Scope of HKAS 18 What is RevenueWhat is Revenue Measurement of RevenueMeasurement of Revenue Sales of GoodsSales of Goods Rendering of ServicesRendering of Services Interest , Royalties and DividendsInterest , Royalties and Dividends

Objective of HKAS 18Objective of HKAS 18 Income = Revenue?Income = Revenue? IncomeIncome is define in the Framework for the Preparation is define in the Framework for the Preparation

and Presentation of F/S as:and Presentation of F/S as: the increase in economic benefits during the accounthe increase in economic benefits during the accoun

ting period in form of inflowsting period in form of inflows Enhancements of assets or decrease of liabilities thEnhancements of assets or decrease of liabilities th

at result in increases in equityat result in increases in equity Other than those relating to contributions from equitOther than those relating to contributions from equit

y participantsy participants Revenue is income that Revenue is income that arising in the arising in the course of the orcourse of the or

dinary activitiesdinary activities of an entity of an entity

Objective of HKAS 18Objective of HKAS 18

The objective of HKAS 18 is to prescribeThe objective of HKAS 18 is to prescribe- the accounting treatment of revenue arising from cert- the accounting treatment of revenue arising from certain types of transactions and eventsain types of transactions and events

The primary issue in accounting for revenue is The primary issue in accounting for revenue is determidetermining whenning when to recognise revenue to recognise revenue

Revenue is recognised whenRevenue is recognised when- It is probable that - It is probable that future economic benefitsfuture economic benefits will flow to will flow to the entity the entity ANDAND- these benefits - these benefits can be measured reliablycan be measured reliably

Scope of HKAS 18Scope of HKAS 18

HKAS 18 shall be applied in accounting HKAS 18 shall be applied in accounting for revenue arising from the following for revenue arising from the following transactions and eventstransactions and events

(a) the sale of goods;(a) the sale of goods;

(b) the rendering of services; and(b) the rendering of services; and

(c) the use by others of entity assets (c) the use by others of entity assets yielding interest, royalties and dividendsyielding interest, royalties and dividends

Scope of HKAS 18Scope of HKAS 18

Sales of GoodsSales of Goods Includes goods produced or purchased for resaIncludes goods produced or purchased for resa

le, such as land and property held for resalele, such as land and property held for resale

Renderring of servicesRenderring of services Services related to consttuction contracts not dServices related to consttuction contracts not d

ealt with in HKAS 18, but in HKAS 11ealt with in HKAS 18, but in HKAS 11

Scope of HKAS 18Scope of HKAS 18

HKAS 18 does not deal with revenue arising from:HKAS 18 does not deal with revenue arising from:a)a) Lease agreements (see HKAS 17 Leases)Lease agreements (see HKAS 17 Leases)b)b) Dividends arising from investments which are Dividends arising from investments which are

accounted for under equity method (see HKAS 28 accounted for under equity method (see HKAS 28 Invests in Associates)Invests in Associates)

c)c) Insurance contracts (see HKFRS 4 Insurance Insurance contracts (see HKFRS 4 Insurance Contracts)Contracts)

d)d) Changes in FV of financial assets and financial Changes in FV of financial assets and financial liabilities or their disposal (see HKAS 39)liabilities or their disposal (see HKAS 39)

e)e) Changes in value of other current assetsChanges in value of other current assetsf)f) Initial recognition for FV of biological assets related to Initial recognition for FV of biological assets related to

agricultural activity (see HKAS 41)agricultural activity (see HKAS 41)

What is RevenueWhat is Revenue Only Only gross inflowsgross inflows of economic benefits received and of economic benefits received and

receivable by the entity receivable by the entity on its own accounton its own account Amounts Amounts collected on behalf of 3rd partiescollected on behalf of 3rd parties, such as , such as

sales taxes, goods and services taxes are sales taxes, goods and services taxes are NOT NOT economic benefits which flow to the entityeconomic benefits which flow to the entity and do and do NOT NOT result in increases in equityresult in increases in equity..

Therefore, they are excluded from revenueTherefore, they are excluded from revenue E.g. an agency relationship, the gross inflows of E.g. an agency relationship, the gross inflows of

economic benefits include amounts collected on behalf economic benefits include amounts collected on behalf of the principal and which of the principal and which do not result in increases in do not result in increases in equity for the entityequity for the entity

Amounts collected on behalf of principal are not revenueAmounts collected on behalf of principal are not revenue Instead, revenue is amount of commissionInstead, revenue is amount of commission

Measurement of RevenueMeasurement of Revenue RevenueRevenue shall be measured at shall be measured at FAIR VALUEFAIR VALUE of the of the

consideration received or receivable.consideration received or receivable.- FVFV is the amount for which an asset could be is the amount for which an asset could be

exchanged, or a liability settled, between knowledgeable, exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.willing parties in an arm’s length transaction.

- The amount of revenue arising on a transaction is The amount of revenue arising on a transaction is usually usually determined by agreementdetermined by agreement between the entity and between the entity and the buyer or user of the asset.the buyer or user of the asset.

- It is measured at It is measured at FV of considerationFV of consideration received or received or receivable less receivable less any trade discountsany trade discounts and and rebates allowedrebates allowed

- Normally, the consideration is Normally, the consideration is in form of cash or cash in form of cash or cash equivalents.equivalents.

Measurement of RevenueMeasurement of Revenue

Discounting required when inflow deferredDiscounting required when inflow deferred

- when the inflow of C & CE is deferred, the fair - when the inflow of C & CE is deferred, the fair value of the consideration may be less than the value of the consideration may be less than the normal amount of cash received or receivable.normal amount of cash received or receivable.

e.g. An entity may provide e.g. An entity may provide - Interest free credit to buyerInterest free credit to buyer- Accept a note receivable bearing a below-Accept a note receivable bearing a below-

market interest rate from the buyer as market interest rate from the buyer as consideration for the sales of goodsconsideration for the sales of goods

Measurement of RevenueMeasurement of Revenue When the arrangement effectively constitutes a When the arrangement effectively constitutes a financing financing

transactiontransaction, the fair value of the consideration is determi, the fair value of the consideration is determined by ned by discountingdiscounting all future receipts using an imputed r all future receipts using an imputed rate of interest.ate of interest.- The imputed rate of interest is the more clearly determi- The imputed rate of interest is the more clearly determinable of either:nable of either:a) prevailing rate for a similar instrument of an issuer wita) prevailing rate for a similar instrument of an issuer with a similar credit rating; orh a similar credit rating; orb) a rate of interest that discounts the nominal amount of b) a rate of interest that discounts the nominal amount of the instrument to the current cash sales price of the goodthe instrument to the current cash sales price of the goods or servicess or services

The difference between the fair value and nominal amouThe difference between the fair value and nominal amount of the consideration is recognised as nt of the consideration is recognised as interest revenueinterest revenue

Measurement of RevenueMeasurement of Revenue Exchange of goods or servicesExchange of goods or services- When goods or services are exchanged or swapped for When goods or services are exchanged or swapped for

goods or services which are of a goods or services which are of a similar naturesimilar nature and and valuevalue, the exchange is , the exchange is not regardednot regarded as a transaction as a transaction which generates revenue.which generates revenue.

- When goods are sold or services are rendered in When goods are sold or services are rendered in exchange for exchange for dissimilar goods or servicesdissimilar goods or services, it is regarded , it is regarded as a transaction which as a transaction which generates revenuegenerates revenue..

- The revenue is The revenue is measured at FV of goods or services measured at FV of goods or services receivedreceived..

- When the When the FV cannot be measured reliablyFV cannot be measured reliably, the revenue , the revenue is is measured at the fair value of the goods or services measured at the fair value of the goods or services given upgiven up..

Sale of GoodsSale of GoodsMain PrincipleMain Principle Revenue from the sale of goods shall be recognised wRevenue from the sale of goods shall be recognised w

hen all the following conditions have been satisfied:hen all the following conditions have been satisfied:a)a) The entity has The entity has transferredtransferred to the buyer the to the buyer the significant risignificant ri

sks and rewardssks and rewards of ownership of the goods; of ownership of the goods;b)b) The entity retains (i) The entity retains (i) neither continuing managerial invoneither continuing managerial invo

lvementlvement to the degree usually associated with ownersh to the degree usually associated with ownership (ii) ip (ii) nor effective controlnor effective control over the goods sold; over the goods sold;

c)c) The amount of revenue can be The amount of revenue can be measured reliablymeasured reliably;;d)d) It is It is probableprobable that the that the economic benefitseconomic benefits associated wit associated wit

h the transaction will flow to the entity; andh the transaction will flow to the entity; ande)e) The The costscosts incurred or to be incurred in respect of the tr incurred or to be incurred in respect of the tr

ansaction can be ansaction can be measured reliablymeasured reliably..

Sale of GoodsSale of GoodsMain PrincipleMain Principle The assessment of when an entity has transferred the The assessment of when an entity has transferred the

significant risks and rewards of ownership to the buyersignificant risks and rewards of ownership to the buyer- requires an examination of the circumstances of the - requires an examination of the circumstances of the transaction.transaction.

In most cases, the transfer of risks and rewards of In most cases, the transfer of risks and rewards of ownershipownership- coincides with the transfer of the legal title or the - coincides with the transfer of the legal title or the passing of possession to the buyer.passing of possession to the buyer.- This is the case for most retail sales.- This is the case for most retail sales.

In other cases, the transfer of risks and rewards of In other cases, the transfer of risks and rewards of ownershipownership- occurs at a different time from the transfer of legal title - occurs at a different time from the transfer of legal title or passing of possessionor passing of possession

Sale of GoodsSale of Goods

Main PrincipleMain PrincipleSeveral situations should be placed attention, Several situations should be placed attention,

includingincluding1)1)The entity retains significant risks of ownershipThe entity retains significant risks of ownership2)2)The entity retains only insignificant risk of The entity retains only insignificant risk of

ownershipownership3)3) Inflow of future economic benefits may not be Inflow of future economic benefits may not be

probableprobable4)4)Revenue and expenses relating to the same Revenue and expenses relating to the same

transactiontransaction

Sale of GoodsSale of Goods1)1) Entity Retains Significant Risks of OwnershipEntity Retains Significant Risks of Ownership If the entity retains significant risks of ownership, the traIf the entity retains significant risks of ownership, the tra

nsaction is not a sale and revenue is not recognisednsaction is not a sale and revenue is not recognised Examples include:Examples include:a)a) When the entity When the entity retains an obligationretains an obligation for unsatisfactory for unsatisfactory

performance performance not covered by normal warranty provisionsnot covered by normal warranty provisions;;b)b) When the When the receipt of revenuereceipt of revenue from a particular sale is from a particular sale is coco

ntingent on the derivation of revenue by the buyerntingent on the derivation of revenue by the buyer from i from its sale of the goods;ts sale of the goods;

c)c) When the goods are When the goods are shipped subject to installationshipped subject to installation and t and the he installation is a significant partinstallation is a significant part of the contract which of the contract which has has not yet been completednot yet been completed by the entity; and by the entity; and

d)d) When the When the buyer has the right to rescind (buyer has the right to rescind ( 取消取消 )) the purcthe purchasehase for a reason specified in the sales contract and the for a reason specified in the sales contract and the entity is entity is uncertain about the probability of returnuncertain about the probability of return

Sale of Goods (example)Sale of Goods (example)

Goods shipped subject to conditions:Goods shipped subject to conditions:a)a) Installation and inspectionInstallation and inspectionRevenue is normally recognised whenRevenue is normally recognised when- the buyer the buyer accepts deliveryaccepts delivery, and, and- installation and inspection are completeinstallation and inspection are complete..

However, revenue is recognised immediately upon the buyHowever, revenue is recognised immediately upon the buyer’s acceptance of delivery when:er’s acceptance of delivery when:

(i)(i) the installation process is the installation process is simplesimple in nature, or (buy TV) in nature, or (buy TV)(ii)(ii) The inspection is performed The inspection is performed only for purposes of final donly for purposes of final d

etermination of contract pricesetermination of contract prices (shipment of iron ore) (shipment of iron ore)

Sale of GoodsSale of Goodsb) b) On approval when the buyer has negotiated a limited right On approval when the buyer has negotiated a limited right

of returnof return- when there is uncertainty about the possibility of return, re- when there is uncertainty about the possibility of return, revenue is recognised whenvenue is recognised when- the shipment has been - the shipment has been formally accepted by the buyerformally accepted by the buyer or or- the - the goods have been delivered and time period for rejectigoods have been delivered and time period for rejection has elapsedon has elapsed..

c)c) Consignment sales under which the recipient (buyer) underConsignment sales under which the recipient (buyer) undertakes to sell the goods on behalf of the shipper (seller)takes to sell the goods on behalf of the shipper (seller)- Revenue is recognised by the shipper - Revenue is recognised by the shipper when the goods arwhen the goods are sold by the recipient to a 3rd partye sold by the recipient to a 3rd party

d)d) Cash on delivery salesCash on delivery sales- Revenue is recognised when delivery is made and cash i- Revenue is recognised when delivery is made and cash is received by the seller or its agent s received by the seller or its agent

Sale of GoodsSale of GoodsB)B) Entity Retains Only Insignificant Risks of OwnershipEntity Retains Only Insignificant Risks of Ownership If an entity retains only an insignificant risk of ownershipIf an entity retains only an insignificant risk of ownership

- the transaction is a sale and revenue is recognised.- the transaction is a sale and revenue is recognised. For examples, a seller may retain the legal title to the goodFor examples, a seller may retain the legal title to the good

s solely to protect the collectibility of the amount due.s solely to protect the collectibility of the amount due.- In such a case, if the entity has transferred the significant - In such a case, if the entity has transferred the significant risks and rewards of ownership, the transaction is a sale arisks and rewards of ownership, the transaction is a sale and revenue is recognised.nd revenue is recognised.

Another example of an entity retaining only an insignificant Another example of an entity retaining only an insignificant risk of ownership may be a retail sale when a refund is offrisk of ownership may be a retail sale when a refund is offered if the customer is not satisfied.ered if the customer is not satisfied.- Revenue in such cases is recognised at the time of sale - Revenue in such cases is recognised at the time of sale provided the sellerprovided the seller

- can reliably estimate future returns and- can reliably estimate future returns and- recognises a liability for returns based on previous - recognises a liability for returns based on previous

experience and other relevant factorsexperience and other relevant factors

Sale of GoodsSale of Goods ““Bill and hold” sales, in which delivery is delayed at the bBill and hold” sales, in which delivery is delayed at the b

uyer’s request but the buyer takes title and accepts billinuyer’s request but the buyer takes title and accepts billing.g.

Revenue is recognised when the buyer takes title, providRevenue is recognised when the buyer takes title, provided:ed:a)a) it is it is probableprobable that that delivery will be madedelivery will be made;;b)b) the item is the item is on handon hand, , identifiedidentified and and ready for deliveready for deliveryry to the buyer at the time the sale is recognised;to the buyer at the time the sale is recognised;c)c) the buyer the buyer specifically acknowledges the deferredspecifically acknowledges the deferred

delivery instructions; anddelivery instructions; andd) d) the the usual payment terms applyusual payment terms apply

Revenue is not recognised when there is simply an intentRevenue is not recognised when there is simply an intention to acquire or manufacture the goods in time for deliveion to acquire or manufacture the goods in time for deliveryry

Sale of GoodsSale of Goods

C) Inflow of Future Economic Benefits Not ProbaC) Inflow of Future Economic Benefits Not Probableble

Revenue not recognised if inflow is not probableRevenue not recognised if inflow is not probable Revenue is recognised only when it is Revenue is recognised only when it is probabprobab

lele that the that the economic benefitseconomic benefits associated with associated with the transaction will flow to the entity.the transaction will flow to the entity.

In some cases, this may In some cases, this may not be probablenot be probable- until the consideration is received or- until the consideration is received or- until an uncertainty is removed- until an uncertainty is removed

Sale of GoodsSale of GoodsC) Inflow of Future Economic Benefits Not ProbableC) Inflow of Future Economic Benefits Not Probable

Inflow is not probable after revenue is recognisedInflow is not probable after revenue is recognised When an uncertainty arises about the collectibility When an uncertainty arises about the collectibility

of an of an amount already included in revenueamount already included in revenue

- the uncollectible amount or the amount in respec- the uncollectible amount or the amount in respect of which recovery has ceased to be probable is t of which recovery has ceased to be probable is rrecognised as an expense (no offsetting)ecognised as an expense (no offsetting),,

- rather than as an adjustment of the amount of re- rather than as an adjustment of the amount of revenue originally recognisedvenue originally recognised

Sale of GoodsSale of GoodsD) Matching of Revenues and ExpensesD) Matching of Revenues and Expenses Revenue and expenses that relate to the same transactiRevenue and expenses that relate to the same transacti

on or other event are recognised simultaneouslyon or other event are recognised simultaneously- this process is commonly referred to as the matching of - this process is commonly referred to as the matching of revenue and expenses.revenue and expenses.

Expenses, including warranties and other costs to be incExpenses, including warranties and other costs to be incurred after shipment of the goods can normally be measurred after shipment of the goods can normally be measured reliably when the other conditions for the recognitioured reliably when the other conditions for the recognitions of revenue have been satisfied.ns of revenue have been satisfied.

However, However, revenue cannot be recognisedrevenue cannot be recognised when the when the expenexpenses cannot be measured reliablyses cannot be measured reliably- in such circumstances, - in such circumstances, any consideration already receiany consideration already receivedved for the sale of goods is for the sale of goods is recognised as a liabilityrecognised as a liability

Rendering of ServicesRendering of Services

Main PrincipleMain Principle When the outcome of a transaction involving thWhen the outcome of a transaction involving th

e rendering of services e rendering of services can be estimated reliablcan be estimated reliablyy- revenue associated with the transaction shall - revenue associated with the transaction shall be be recognised by reference to the stage of comrecognised by reference to the stage of completionpletion of the transaction at the balance sheet of the transaction at the balance sheet date.date.

The outcome of a transaction can be estimated The outcome of a transaction can be estimated reliably when all the following conditions are sareliably when all the following conditions are satisfied:tisfied:

Rendering of ServicesRendering of Services

a)a) The amount of revenue The amount of revenue can be measure can be measure reliablyreliably

b)b) It is It is probableprobable that the that the economic benefitseconomic benefits associated with the transaction associated with the transaction will flowwill flow to the to the entityentity

c)c) The The stage of completionstage of completion of the transaction at of the transaction at the balance sheet date the balance sheet date can becan be measured measured reliablyreliably; and; and

d)d) The The costs incurredcosts incurred for the transaction and the for the transaction and the costs to complete the transaction costs to complete the transaction can be can be measure reliablymeasure reliably

Rendering of ServicesRendering of Services

Under the percentage of completion methodUnder the percentage of completion method- revenue is recognised in the accounting periods in wh- revenue is recognised in the accounting periods in which the services are rendered.ich the services are rendered.

The recognition of revenue on this basis providesThe recognition of revenue on this basis provides- - useful information on the extentuseful information on the extent of service activity and of service activity and performanceperformance during a period. during a period.

HKAS 11 Construction Contracts also requires the recoHKAS 11 Construction Contracts also requires the recognition of revenue on this basisgnition of revenue on this basis- The requirements of HKAS 11 are generally applicabl- The requirements of HKAS 11 are generally applicable to the recognition of revenue and the associated expe to the recognition of revenue and the associated expenses for a transaction involving the rendering of servicenses for a transaction involving the rendering of serviceses

Rendering of ServicesRendering of ServicesReliable Estimates of RevenueReliable Estimates of Revenue An entity is generally able to make An entity is generally able to make reliable estimatesreliable estimates after it has agr after it has agr

eed to the following with the other parties to the transaction:eed to the following with the other parties to the transaction:

a) a) each party’s enforceable rightseach party’s enforceable rights regarding the service to be provid regarding the service to be provided and received by the parties;ed and received by the parties;b) the b) the consideration to be exchangedconsideration to be exchanged; and; andc) the c) the manner and terms of settlementmanner and terms of settlement

It is also usually necessary for the entity to have an effective internal It is also usually necessary for the entity to have an effective internal financial budgeting and reporting systemfinancial budgeting and reporting system

The entity The entity reviews and, when necessary, revises the estimatesreviews and, when necessary, revises the estimates of re of revenue as the service is performedvenue as the service is performed

The need for The need for such revisionssuch revisions does not necessarilydoes not necessarily indicate that the o indicate that the outcome of the utcome of the transaction cannot be estimated reliablytransaction cannot be estimated reliably

Rendering of ServicesRendering of ServicesStage of Completion of a TransactionStage of Completion of a Transaction

The stage of completion of a transaction may be determined by a variety of The stage of completion of a transaction may be determined by a variety of methods.methods.- An entity uses the method that measures reliably the services performed.- An entity uses the method that measures reliably the services performed.

Depending on the nature of the transaction, the method may include:Depending on the nature of the transaction, the method may include:a)a) Surveys of work performed;Surveys of work performed;b)b) Services performed to date as a percentage of total services to be Services performed to date as a percentage of total services to be

performed; orperformed; orc)c) The proportion that costs incurred to date bear to the estimated total costs of The proportion that costs incurred to date bear to the estimated total costs of

the transactionthe transaction- only costs that reflect services performed to date are included in costs - only costs that reflect services performed to date are included in costs incurred to date.incurred to date.- only costs that reflect services performed or to be performed are included - only costs that reflect services performed or to be performed are included in the estimated total costs of the transaction. in the estimated total costs of the transaction.

Progress payments and advances received from customers often do not Progress payments and advances received from customers often do not reflect the services performed.reflect the services performed.

Rendering of ServicesRendering of Services Servicing fees included in the price of the productServicing fees included in the price of the product

When the selling price of a product includes When the selling price of a product includes an identifian identifiable amountable amount for subsequent servicingfor subsequent servicing (e.g. after sales (e.g. after sales support and product enhancement on sale of softwarsupport and product enhancement on sale of software)e)

That amount is That amount is deferred deferred and and recognised as revenue orecognised as revenue over the periodver the period during which the service is performed during which the service is performed

The amount deferred is thatThe amount deferred is that- Which will Which will cover the expected costscover the expected costs of the services un of the services un

der the agreementder the agreement- Together Together with a reasonable profitwith a reasonable profit on those services on those services

Rendering of ServicesRendering of ServicesOutcome of Services Not Estimated ReliablyOutcome of Services Not Estimated Reliably

When the When the outcomeoutcome of the transaction involving the rendering of se of the transaction involving the rendering of services rvices cannot be estimated reliablycannot be estimated reliably,,- Revenue shall be - Revenue shall be recognised only to the extent of the expenses rrecognised only to the extent of the expenses recognised that are recoverableecognised that are recoverable

During the During the early stagesearly stages of a transaction, it is often the case that th of a transaction, it is often the case that the outcome of the transaction e outcome of the transaction cannot be estimated reliablycannot be estimated reliably

- Nevertheless, it may be probable that the entity will recover the tr- Nevertheless, it may be probable that the entity will recover the transaction costs incurredansaction costs incurred

Therefore, revenue is recognised only to the extent of costs inTherefore, revenue is recognised only to the extent of costs incurred that are expected to be recoveredcurred that are expected to be recovered

As the outcome of the transaction cannot be estimated reliably,As the outcome of the transaction cannot be estimated reliably, no profit is recognised. no profit is recognised.

Rendering of ServicesRendering of ServicesOutcome of Services Not Estimated ReliablyOutcome of Services Not Estimated Reliably When the When the outcomeoutcome of a transaction of a transaction cannot be estimated cannot be estimated

reliablyreliably and it is and it is not probablenot probable that the that the costs incurred will costs incurred will be recoveredbe recovered- Do not recognise revenue and the costs incurred are re- Do not recognise revenue and the costs incurred are recognised as an expensecognised as an expense

When the When the uncertaintiesuncertainties that prevented the outcome of th that prevented the outcome of the contract being estimated reliablye contract being estimated reliably no longer exist, no longer exist,- Revenue is recognised in accordance with the main pri- Revenue is recognised in accordance with the main principle on recognising revenue on rendering of servicesnciple on recognising revenue on rendering of services- Rather than in accordance with the above descriptions- Rather than in accordance with the above descriptions

Interest, Royalties and Interest, Royalties and DividendsDividends

Main PrincipleMain Principle Revenue arising from the use by others of entitRevenue arising from the use by others of entit

y assets yielding interest, royalties and divideny assets yielding interest, royalties and dividends shall be recognised on the bases set out in tds shall be recognised on the bases set out in the following paragraph when:he following paragraph when:

a)a)It isIt is probable probable that the that the economic benefitseconomic benefits ass associated with the transaction ociated with the transaction will flowwill flow to the e to the entity; andntity; and

b)b)The amount of the revenue The amount of the revenue can be measurecan be measured reliablyd reliably

Interest, Royalties and Interest, Royalties and DividendsDividends

Revenue shall be recognised on the following bRevenue shall be recognised on the following bases:ases:

a)a) Interest shall be recognised using the effective Interest shall be recognised using the effective interest method as set out in HKAS 39interest method as set out in HKAS 39

b)b)Royalties shall be recognised on an accrual baRoyalties shall be recognised on an accrual basis in accordance with the substance of the relsis in accordance with the substance of the relevant agreement; andevant agreement; and

c)c) Dividends shall be recognised when the sharehDividends shall be recognised when the shareholder’s right to receive payment is establishedolder’s right to receive payment is established

DisclosureDisclosureAn entity shall disclose:An entity shall disclose:

a)a) The accounting policies adopted for the recognition of revenue iThe accounting policies adopted for the recognition of revenue including the methods adopted to determine the stage of complncluding the methods adopted to determine the stage of completion of transactions involving the rendering of servicesetion of transactions involving the rendering of services

b)b) The amount of each significant category of revenue recognised The amount of each significant category of revenue recognised during the period including revenue arising fromduring the period including revenue arising from

i)i) The sales of goodsThe sales of goodsii)ii) The rendering of servicesThe rendering of servicesiii)iii) InterestInterestiv)iv) RoyaltiesRoyaltiesv)v) Dividends; andDividends; and

c)c) The amount of revenue arising from exchange of goods or serviThe amount of revenue arising from exchange of goods or services included in each significant category of revenueces included in each significant category of revenue

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