Revenue Recognition Principle
The main problems in accounting for revenue is determining when revenue recognition. On
the principle of recognition of revenue (revenue recognation
principle), revenue is generally recognized when (1) realized or
realizable and (2) is generated (earned). The purpose of this statement is that:
Revenue
is considered realized when goods and services, merchandise, or other
assets exchanged for cash or claims to cash; Revenue is considered
realizable when assets received in exchange for the conversion
immediately (ready to be exchanged) into cash or claims to cash with a
known quantity;
Considered
income generated (earned) if the relevant entity is essentially
finished what should be done to get the right to benefits held by
income, ie, if the process of generating real profits have been
completed or has been completed.
Four transaction revenue has been recognized in accordance with the above principles, namely:
Revenue from product sales is recognized at the date of sale, usually interpreted as the date of delivery to the customer.
Revenue
from rendering of services is recognized when services are recognized
when the services are implemented and can be billed.
Revenues
from allowing others to use enterprise assets such as interest, rents
and royalties is recognized in accordance with the implementation of
time or when the asset is used.
Income from disposal of assets other than products is recognized at the date of sale.
Measurement
revenues by Indonesian Institute of Accountants (IAI) is measured by
the fair value of the consideration received or receivable.
According to Statement of Financial Accounting Standards (SFAS) No.. 23
on earnings stating that the income arising from economic events, the
following: (1) Sales of goods, (2) Sales of services, (3) Use of
corporate assets by other parties that generate interest, royalties, and
dividends.
Revenue from sale of goods shall be recognized when:
The Company has transferred significant risks and rewards of ownership have transferred the goods to the buyer;
Companies no longer manage nor effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the company, and
Costs incurred and will be incurred in connection with the transaction can be measured reliably.
Revenue
related to the sale transaction services that can be estimated reliably
(free from misleading terms, material error, and its use as a reliable
and honest tuluis usage than it should be presented or reasonably
expected to be presented) should be recognized by reference to the level
completion of the transaction at the balance sheet date.
A transaction can be estimated reliably when:
It is probable that the economic benefits associated with the transaction will flow to the company;
Stage of completion of a transaction from the balance sheet date can be measured reliably;
The amount of revenue can be measured reliably;
Costs incurred for the transaction and the costs for the completion of the transaction can be measured reliably.
When
transactions include the sale of services can not be estimated
reliably, revenue is recognized only concerned with the burden that has
been recognized that are recoverable.
Revenue
arising from the use of corporate assets by other parties that generate
interest, royalties and dividends shall be recognized on the basis of:
Interest shall be recognized on the basis of the proportion of time that takes into account the results of effective asset;
Royalties should be recognized on an accrual basis in accordance with the substance of the relevant agreement, and
In the cost method (cost method), cash dividends are recognized when the shareholders' rights to receive payment is established.
Recognition on the basis of the performed when:
(1) probable economic benefits associated with the transaction will flow to the company, and
(2) the amount of revenue can be measured reliably.
But
if uncertainty arises about the collectibility of an amount already
included in revenue, the amount of which can not be billed, or the
amount of recovery or return is no longer probable, is recognized sebgai
load, the adjustment of the amount of revenue originally recognized.
All of the above extract conceptual nature of the income and the basis of accounting for revenue transactions. In
the revenue recognition practices, sometimes recognized as other income
in the process of making a profit, that is mainly caused by (1) wish to
acknowledge earlier (Earlier recognize) if there is a high degree of
certainty about the amount of revenue generated, and (2) willingness
to defer recognition of revenue if the level of uncertainty about the
amount of revenue or expense is high, or Jiak penjulan not constitute
substantial completion of the process of making a profit.
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