Revenues Key Definition Revenue: the gross inflow of economic benefits (cash, receivables, other assets) arising from the ordinary operating activities of an entity (such as sales of goods, sales of services, interest, royalties, and dividends). [IAS 18.7]

Cont. Measurement of Revenue Revenue should be measured at the fair value of the consideration received or receivable. [IAS 18.9] An exchange for goods or services of a similar nature and value is not regarded as a transaction that generates revenue. However, exchanges for dissimilar items are regarded as generating revenue. [IAS 18.12]

Cont. Recognition of Revenue Recognition, as defined in the IASB Framework, means incorporating an item that meets the definition of revenue (above) in the income statement when it meets the following criteria: it is probable that any future economic benefit associated with the item of revenue will flow to the entity, and the amount of revenue can be measured with reliability

Expenses The matching principle requires that all expenses incurred in generating that same revenue also be recognized. The net result is a measure—net income— that matches current period accomplishments and sacrifices.

Cont. An expense can be recognized: i. Based on an exact cause-and-effect relationship between a revenue and expense event. ii. By associating an expense with the revenues recognized in a specific time period. iii. By a systematic and rational allocation to specific time periods. iv. In the period incurred, without regard to related revenues.

Contents of the SCI Minimum items that are to be shown on the face of SCI: a) Revenue b) Finance costs c) Share of profits of associates and joint venture d) Tax expense e) A single item comprising post-tax profit or loss of discontinued operation plus the post-tax gain and loss on measurement to fair value less cost of sell or on disposal of assets or disposal groups(s) of discontinued operation

Cont. f) Profit or loss g) Each component of other comprehensive income classified by nature h) Share of profits of other comprehensive income of associates and joint venture i) Total comprehensive income j) Profit for the period attributable to: i. Non-controlling interest, and ii. Owners of the parent

Cont. Items that can be either disclosed on the face of SCI or in the notes are: a) Income and expenses that are material: i. Write-downs of inventories to net realisable value ii. Restructuring costs and reversal of provisions for restructuring iii. Disposal of investments iv. Discontinued operations v. Litigation settlements vi. Other reversals of provisions

Cont. Classification of expense Expense can be presented based on analysis of nature and function

Notes to the accounts Notes accompanying the SCI (disclose on the notes): a) Turnover or other relevant revenue Sales or other operating revenue is to be disclosed together with the method by which it is arrived b) Net results of operating income c) Gross investment income Income from shares and debentures must be disclosed separately, distinguished between income from those shares and debentures quoted on the stock exchange within Malaysia or outside Malaysia; and income from other sources

Cont. d) Interest income e) Rental income f) Depreciation, amortisation and impairment of assets g) Expenses such as: i. Finance cost including interest on debentures, loans. Overdrafts and other borrowing ii. Rent for land and building iii. Hire of plant and machinery iv. Research and development v. Auditors’ remuneration vi. Operating expenses- include items such as cost of sales, distribution costs, administrative expenses, changes in inventories, staff costs

Cont. h) Directors’ remuneration i) Profit or loss, if material, on disposal of non-current tangible or intangible assets j) Profit or loss from continued and discontinued operations k) Taxation for continued and discontinued operations l) Exceptional and unusual credits or charges m) Earnings per share EPS disclose on the face of SCI Basis of calculating EPS disclose on the face or as a note.

Disclosure in SCI 9 th schedule of the CA1965 and various FRS specify the minimum information to be disclosed in the SCI: a) Sales or other operating revenue b) Net profit from trading c) Gross income from investments in subsidiaries d) Gross income from shares and debentures listed in Malaysia e) Gross income from shares and debentures listed outside Malaysia

Cont. f) Gross income from other sources g) Interest income other than from debentures h) Rental income (plant and buildings) i) Depreciation, amortisation and diminution in value of each category of non-current assets, goodwill and intangibles and investments j) Amount charged as interest, rent, hire of plant and research and development k) Any profit or loss, if material, arising on disposal of non-current tangible and intangible assets

Cont. l) Any amount set aside or proposed to set aside from reserves m) Provisions other than provisions for depreciation, and movements in the provision n) Tax payable o) Any tax savings on tax losses p) Dividends paid and proposed q) Directors’ fees and emoluments separately disclosed r) Money value of benefits paid to directors s) Any amount paid or received on account of services provided by present or past directors

Cont. t) Auditors’ remuneration u) Exceptional or unusual revenue or expenses, and the tax effect on them v) Prior year adjustments and tax effect on them w) Changes in estimate x) Significant transactions with related corporations