“Revenue is a key performance metric used by investors and other stakeholders in assessing a company’s performance and future prospects” (Jones and Pagach 2013, p. 30). The measurement of revenue is one of the most important contemporary financial reporting issues. The aim of this assignment is to examine the issues of accounting for revenue based on IFRS 15 Revenue from Contracts with Customers. The objectives include to
- discuss the issues and implications of IFRS 15 and
- analyse the accounting policies for revenue adopted in the annual report of your Rio Tinto
- General information of the assignment
- Your task includes to,
- Read the selected article, the New Revenue Recognition Standard by James Schmutte and James R. Duncan (2016) in The CPA Journal 2016 (January), which is available on Blackboard, and answer the following required questions
- Discuss the new revenue recognition criteria in IFRS 15.
- Are the revenue recognition criteria in IFRS 15 consistent with the requirements in the Conceptual Framework (CF) and why? (You are required to give the paragraph numbers of revenue recognition criteria in CF)
- Evaluate an annual report of Rio Tinto Limited and critique the accounting policies adopted in Rio Tinto’s annual report. In addition, you are required to provide the following revenue information,
- the category of revenue (e.g. the main revenue, other revenues etc.)
- total revenues of current and last financial years
- a summary of accounting policy of revenue, and
- a copy of information about revenue and its policy as evidence
- Discuss the implications e.g. how IFRS will impact on your selected company if it implemented.
- Prepare the assignment in report format based on your study.
- A sample format of the report is shown in Appendix 1. You must follow the provided format to complete your report.
- The words limit of this assignment is 3,000 maximum. However, it should be no less or more than 5% of the words limit excluding references list, footnote, and appendices.