Accounting Standards for Business Enterprises No. 14 - Revenue
Accounting Standards for Business Enterprises No. 14 - Revenue
Accounting Standards for Business Enterprises No. 14 - Revenue
Cai Kuai [2006] No. 3
February 15, 2006
Chapter I General Provisions
Article 1 With the goal of normalizing the recognition and measurement of revenue and the disclosure of the relevant information, the present Standards are formulated in accordance with Enterprise Accounting Standards - Basic Standards.
Article 2 The term "revenue" refers to the gross inflow of economic benefits arising from the ordinary operating activities of an enterprise, an increase in the equity of the owners that is unrelated to their capital investment.
For the purposes of these Standards, revenue shall include income from the sale of goods, the rendering of services, and transfer of asset use rights.
Payments received by an enterprise on behalf of a third party shall be treated as a liability rather than revenue.
Article 3 The revenue arising from such items as long-term equity investments, construction contracts, leases, and basic insurance or reinsurance contracts shall be covered by other corresponding accounting standards.
Chapter II Revenue from the Sale of Goods
Article 4 Revenue from the sale of goods shall be recognized only when all of the following criteria have been met:
1. The enterprise has transferred to the buyer the significant risks and rewards of ownership relevant to the goods in question;
2. The enterprise retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
3. The relevant amount of revenue can be measured reliably;
4. It is probable that the economic benefits related to the transaction will flow into the enterprise; and
5.The relevant costs incurred or to be incurred can be measured reliably.
Article 5 An enterprise shall determine the revenue arising from the sale of goods according to the consideration receivable stipulated in the contract or agreement signed between the enterprise and the buyer, except when the consideration receivable as stipulated in the contract or agreement is unfair.
If the collection of the consideration as stipulated in the contract or agreement is deferred and it is of a financial nature, the revenue from the sale of goods shall be based on the fair value of the consideration receivable as stipulated in the contract or agreement.
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