REVENUE

IS THE GROSS INFLOW OF ECONOMIC BENEFIT OR

SERVICE POTENTIAL DURING THE REPORTING
PERIOD WHEN THOSE INFLOW RESULT IN AN
INCREASE IN NET ASSET/EQUITY, OTHER THAN
INCREASE RELATING TO CONTRIBUTIONS FROM
OWNERS.
 REVENUE FUnds
COMRISE ALL FUNDS DERIVED FROM THE INCOME
OF ANY AGENCY OF THE GOVERNMENT AND
AVAILABLE FOR APPROPRIATION OR
EXPENDITURE IN ACCORDANCE TO LAW.
 4

LEGAL BASIS:
“ CODE:
SECTION 44 OF BOOK VI of 1987
ADMINISTRATIVE
All revenues accruing to an entity by virtue of the
provisions of existing law, order and regulations shall
be deposited or remitted in the national treasury (NT)
or in a duly authorized government depositary, and
shall accrue to the general fund of the national
government unless otherwise specefically provided by
law.
 GOVERNED BY:
PPSAS 9- Revenue from
Exchange Transactions
PPSAS 23- Revenue from
NON- Exchange Transactions
RECOGNITION
PARAMETERS:
 A. THAT REVENUES INCLUDE ONLY THE GROSS
INFLOW OF ECONOMIC BENEFIT OR SERVICE
POTENTIAL RECEIVED OR RECEIVABLE BY ENTITY
IN ITS OWN ACCOUNT.

EXCHANGED NON- EXCHANGED

TRANSACTION TRANSACTION
(PPSAS 9) (PPSAS 23)

Monitored through REGISTRY OF

REVENUE AND OTHER RECEIPT per fund
cluster
 8

EXCHANGED
TRANSACTION
REVENUE RECOGNITION PRINCIPLE,
POINT OF RECOGNITION AND VALUATION
 EXCHANGED TRANSACTIONS Suppl
In which one entity receives asset, extinguished a Use
liability and directly gives approximate equal value to y of
another in exchange. Sale by
Servic
Reven
of Other
ueeson

👨 👩
Good s of
Excha
s Entity
nge
Asset
Trans
action
 INQUIRY NO. 1
DOES ALL TRANSACTIONS INVOLVING
CONSIDERATION RECEIVED FROM
OTHER PARTY CONSTITUTE
EXCHANGED TRANSACTIONS?
PPSAS 23 Par 10: Substance over Form
[...] if the consideration does not
approximate the fair value of the
resources received, the entity shall
determine whether there is a combination
of exchanged and not-exchanged
transactions.
 when is revenue
recognized:
1. It is probable that future economic
benefits and service potential will
flow to the entity.
2. it can be measured reliably.
 Transaction Revenue Recognition Principle
Sale of Goods - The entity has transferred to the purchaser the significant risk
and rewards of ownership of the goods.
- Terminated continuing managerial involvement
- Probable and Reliable Test
Supply of Service - Recognized in straight line basis unless otherwise specified
- In reference to stage of completion
- Stage of completion at reporting date could be measured
reliably.
- Cost incurred and Cost to Complete can be measured reliably.

Notes:
-Outcome cannot be measured reliably: revenue is recognized
ONLY to the extent of expenses recognized that are recoverable.
-No Surplus or Profit is recognized
Use of Asset by Others - Probable and Reliable test
 Use by Others of Entity's
Asset
Interest Royalties Dividends or
- Recognized on time - Recognized as earned
Other Similar
proportion basis -> on the substance of
Effective Yield relevant agreement. Distributions
• The rate of interest - Recognized when the
required to discount the
entity's right to receive is
stream of cash flow.
estsblished.
• Only post acquisition is
recognized accrued -Ex-dividend is not
interest is recognized as recognized as entity's
revenue revenue on acquisition.
 TEST OF REVENUE RECOGNITION
15

A. SERVICE INCOME:
“
- WHEN THE SERVICE IS RENDERED
- FEES ARE COLLECTED
- UPON ISSUANCE OF ACCOMPANYING OUTCOME
(DOCUMENTS)
B. BUSINESS INCOME:
-WHEN FEES ARE BILLED
- FEES ARE COLLECTED
- SIGNIFICANT RISK AND REWARD HAS BEEN
TRANSFERED
- RIGHT TO RECEIVE IS ESTABLISHED (SHARE IN JV)
 16

MEASUREMENT OF REVENUE
▫ Measured at Fair Value of th consideration
received.
▫ Discounts may be taken as a reduction of
the quoted price.
▫ Recognition of Interest Revenue -
deferred payment
 INQUIRY NO. 2
IF THE DISCOUNT REDUCED THE VALUE
OF THE ASSET RECEIVED OR
RECEIVABLE LOWER THAN ITS QUOTED
VALUE, IS IT CONSIDERED AS NON-
EXCHANGE TRANSACTION?
 EXCHANGES OF GOODS
OR SERVICES

Dissimilar in Nature and

Value
Similar in Nature and Value
(Revenue is recognized on
(No revenue is generated)
the FV of the asset received
or receivable)
 19

NON-EXCHANGED Gifts
TRANSACTIONS
and
“
Entity either receives value from another entity
WITHOUT directly giving approximate equal value in Donati
exchange or gives value to another entity without
directly receiving approximately equal value in on
exchange. Servic and
e in Goods Non- Fines
kind in Excha
kind
nge
Transa
 • Individuals, Corporation and Partnership
Tax Revenue • Property
• Goods and Services (VAT)

Fines and • Tax Penalties and Delinquency

• Service and Business Income
Penalties

Share, • Share in National Wealth, PCSO and

Grants and earnings from GOCCs
• Donation in Cash and in Kind
Donation
 how is -revenue
Taxation Revenue Determined at gross
- Not deducted for expenses

recognized:
Gifts and Donation
paid for the tax system.
- Probable and Reliable Test

-Cash
Goods in KindBasis
of Accounting
- Recognized immediately
provided received without
-Measurable and Legally
conditionsCollectible
Donations in Cash and In - Recognized immediately
Kind
 22

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