Agreement Between Two Entities To Exchange Goods Or Services


PARAGRAPHs IFRS 15.BC46F-BC46H contain certain IASB considerations regarding the termination of the contract. The conclusion is that the fact that a company continues to receive the consideration owed by the customer does not prevent the company from considering the termination of the contract. In addition, the IASB notes that it is common for a contract to often grant the company the right to terminate the contract in the event of non-payment by the customer and that such termination does not affect the company`s rights to recover the money owing to the customer. In practice, this may apply to situations in which the entity stops providing goods or services to the customer and recognizes as turnover the consideration received for the service obligations fulfilled. For a contract to enter the scope of IFRS 15, it must be likely that the entity will recover the consideration to which it is entitled. PARAGRAPH IFRS 15.BC45 states that the client`s capacity (i.e. financial capacity) and the intention to pay must be taken into account in this assessment. Note that it refers to the consideration of goods or services that are actually transferred to the customer, i.e. this assessment does not relate to all goods or services promised in the contract. Therefore, if the client did not pay and therefore the entity does not transfer other goods or services, the likelihood of payment of unre transferred goods or services is not taken into account in the consideration of the consideration capacity of the counterparty (IFRS 15.BC46). And the Standard gives the example of two oil companies that accept an oil exchange to meet the demand of their customers at different sites. If the above conditions are not met to achieve the turnover, the consideration received is recorded as a liability which constitutes the obligation for the company to transfer goods or services in the future or to repay the consideration received. See also example 1 of IFRS 15.

Silvia, hello Can you consult. The service company sends us some spare parts that need to be mounted on our equipment, the parts are returned. So there is a continuous exchange of the same goods. The product received is considered our commodity (risks and control of goods are transferred to us), but it is obligatory to return similar extracted parts. To my knowledge, we should account for spare parts received pursuant to IFRS 16 (since similar parts are contained in PPE) at fair value (current market value, regardless of transportation costs, etc.) with relative recognition of liability. While the cut pieces must be accounted for in the difference in pl when disposing and return to the net worth of saldon. As the balance of each part is not available, we make the best estimate, which is approximately the value of the goods received minus the repair costs. Please correct me if you see that there is bad logic. Hello Silvia What if the right accounting treatment for the situation in which third parties ask us to move the transmission tower and they would bear the costs of the new tower? We receive the new tower for free and we have to abandon the old tower (disassembled and disinherited). Is it covered by IAS 16 (asset swap or exchange) or IFRS 15? Contractual terms are fundamental to the agreement. If the contractual conditions are not met, it is possible to terminate the contract and claim damages.

In most cycles, companies are constantly processing certain related transactions, such as. B the purchase or sale of property. A reassessment of the above criteria is only necessary if a significant change in facts and circumstances (e.g.B.

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