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Sep 2011

Study of LKAS 18: Revenue

The latest paper from the CIMA Sri Lanka accounting standard study group examines LKAS 18: revenue. LKAS 18 applies to the ‘revenue’ type of ‘income’. Knowing when and how to account for revenue is of paramount importance to ensure that the company’s financial statements are aligned to the regulatory framework and the stakeholders get a true, fair and consistent view of the performance of the company.

LKAS 32 and LKAS 39 give detailed descriptions of the accounting treatment and presentation of financial instruments, with an implementation date of 1 January 2012. The application of these two standards consistently in organisations will be a major challenge for both the management of the organisation (in terms of reporting) as well as the regulators (in terms of monitoring), and a clear understanding of the standard is imperative to enable a relatively seamless transition.

The objective of the revenue standard is to prescribe the accounting treatment of revenue arising from certain types of transactions and events.

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Study of LKAS 18: Revenue