CIMA Sri Lanka conducted an evening discussion on highlights of LKAS 18: Revenue in August at the CIMA auditorium.
This discussion forum focused on LKAS 18, and its application to various industry sectors. It also covered the standard’s potential impact on risk management, performance management, budgeting, corporate strategy, pricing and calculation of margins. LKAS 18 prescribes the accounting treatment for revenue, specifies the types of transactions and events that fall within the scope of the standard, and the timing of recognition and measurement criteria applicable to revenue.
The complexity of identifying the timing of revenue and value of revenue to be accounted are key practical issues faced by industries such as leisure, retail and telecommunications. This is primarily due to the variety of promotions run by these businesses to gain a competitive edge in the market. Some of these common promotions include bundling of goods, awarding loyalty points, free talk time, free hand-sets, free nights etc. In these scenarios revenue should be recognised considering the substance of transaction and the fair value of goods transferred/service rendered to the buyer.
The deliberations at the forum were made by Sherin Cader, Financial Controller of John Keells Holdings PLC and Sharika Mubarack, Assistant Accountant of Royal Palms Beach Hotel who covered areas such as key highlights of the standard, its application using practical case studies and the impact on management accounting. This presentation was followed by a panel discussion moderated by Cader, participated by industry experts: Sanjeewa Anthony, Executive Director of Jetwing Hotels Ltd.; Manil Jayesinghe, Partner of Ernest & Young; Charitha Subasinghe, Chief Executive Officer of Jaykay Marketing Services (Pvt) Ltd.; and Supun Weerasinghe, Group Chief Operating Officer of Dialog Axiata PLC.