The aim of this thesis is to analyze how to recognise revenues arising from service and repairing of physical assets and how these revenues must be presented in the annual report to give a true and fair view of the company’s revenues. To make this analyze it is important to know the current legislation. In Denmark all companies have to prepare their financial statement in accordance to the Danish Financial Statements Act. The Danish Financial Statements Act is a framework which means that the companies can use the International Auditing Standards as interpretation to The Danish Financial Statements Act. In order to answer the thesis statement, a survey has been prepared and sent to some auditors. The purpose of this survey is to find out if there will different positions how to recognise revenues from service and repairing of physical assets. Based on the legal framework and the survey, the conclusion of the thesis standard is that sales from service of physical assets must be recognised as sales rendering from services by using the percentage of completion method. This means that the revenue will be recognized in the financial statement based on the stage of completion at the balance sheet date. The value of work in progress on the balance sheet date must be presented as receivables in the balance. Revenues from repairing of physical assets must be recognized as sales of goods by using the sales method. In accordance to IFRIC 15 it is possible to recognise revenues from sales of goods by using the percentage of completion method if control and significant risks and rewards of the ownership is transferred to costumer as the work is progressed. The most important conclusion of this thesis is that the reporting enterprise has to consider which method of recognition will give the fairest presentation of the enterprise’s revenues from sales for each transaction made. Because each reporting enterprise has its own opinion to which method gives the fairest presentation, it is important to give the financial user enough information in the annual report so they have a chance to make their own assessment of the recognised values.
|Educations||MSc in Auditing, (Graduate Programme) Final Thesis|
|Number of pages||102|