Question

Example 7.3 It may be uncertain that a foreign governmental authority will grant permission to remit the consideration from a sale in a foreign country. Discuss whether revenue can be recognized under this situation

short answer required

Answer 1

Revenue can be only recognised when it is probable that the economic associated gains with the transaction will flow to the business. In the given scenario the revenue can be recognized only when the permission is granted and the uncertainty is removed. In case an uncertainty occurs in regard to the collectability of an amount already considered in revenue, the uncollectible amount (or the amount on which recovery has ceased to be probable) will be recognised as an expense, instead of an adjustment of the revenue amount originally recognised.