Proportionate completion method:
Revenue is recognized proportionately by reference to the degree of completion. When services are provided by an indeterminate number of acts over a specific period of time, revenue is recognized on a straight line' basis over the specific period unless there is evidence that some other method better represents the pattern of performance.
Completed service contract method:
Revenue is recognized when the rendering of service under a contract is completed or substantially completed.
(d) Revenue arising from the use by others of enterprise resources yielding interest, royalties and dividends should only be recognized when no significant uncertainty as to measurability or collectability exists.
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
Royalties are recognized on an accrual basis in accordance with the terms of the relevant agreement.
Dividends are recognized when the owner's right to receive payment is established.
(e) When revenue from foreign countries requires exchange permission and uncertainty in remittance is anticipated, revenue recognition may need to be postponed.
(f) When the uncertainty relating to collectability arises subsequent to the time of sale or the rendering of their services, it is more appropriate to make separate provision to reflect the uncertainty rather than to adjust the amount of revenue originally recorded.
(g) When recognition of revenue is postponed due to the effect of uncertainties, it is considered as revenue of the period in which it is properly recognized.
(h) Trade discounts and volume rebates received are not encompassed within the definition of revenue. They should be deducted in determining income.
(i) The board noted that some enterprises disclose turnover net of excise duty, while others disclose turnover at gross amount. With a view to bring uniformity.
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