Septiembre 2011

Revenue from sales and services

Revenue from sales and services

Measurement

Revenue from the sale of goods and the rendering of services is measured at the fair value of the consideration received or receivable arising therefrom, which, unless there is evidence to the contrary, is the agreed- upon price net of discounts and any similar items.

Revenue from sales

Revenue from the sale of goods is only recognised when:

• 
  The entity has transferred to the buyer the significant risks and rewards of ownership of the goods, irrespective of the transfer of legal title.
  

• 
  The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
  

Also, revenue is recognised when it is probable that the profit or economic benefits from a transaction will flow to the company and when the amount of the revenue and the costs incurred or to be incurred can be measured reliably.

Revenue from the rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period.


When the outcome of a transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
Provisions and contingencies

Provisions and contingencies

Recognition

An entity must recognise provisions for liabilities which, meeting the definition and fulfilling the recognition criteria in the conceptual framework, are of uncertain timing or amount. Provisions may arise from:

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  a legal provision or a contractual requirement.
  

• 
  an implicit or constructive obligation, which arises from the entity creating a valid expectation on the part of other parties that it will discharge certain responsibilities.
  

Measurement

Based on the information available at any given time, at the end of each reporting period provisions are measured at the present value of the best possible estimate of the amount required to settle the obligation or to transfer it to a third party. Where discounting is used, adjustments made to provisions are recognised as interest cost on an accrual basis.

The compensation to be received from a third party on settlement of the obligation does not give rise to a reduction in the amount of the debt (without prejudice to the recognition of the asset, provided that there are no doubts that the reimbursement will take place), unless there is a legal or contractual relationship whereby a portion of the risk has been externalised.