May 2021 Q2 c.
State and Explain FOUR (4) Conditions under which Revenue from The Sale of Goods shall be recognised in accordance with IPSAS 9: Revenue from Exchange Transactions. (4 marks)
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Revenue from the sale of goods shall be recognised when all the following conditions have been satisfied:
- The entity has transferred to the purchaser the significant risks and rewards of ownership of the goods;
- The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
- The amount of revenue can be measured reliably;
- The economic benefits or service potential associated with the transaction will probably flow to the entity; and
- The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(Any four points @ 1 mark each = 4 marks)