Revenue Recognition IFRS 15 for Hotai Motorcycle Case Study Analysis
Thirdly, the insurance claim by Hotai for the manufacturing costs of the goods, clearly implies that Hotai has the possession of the goods and is obliged to bear any losses before the completion of delivery. Based onthe above points; it could be concluded that the distributor is not liable to pay for any loss. (See Exhibit 2 for a brief explanation of each point)
Exhibits
Exhibit 1: Summary
| Revenue IFRS 15 | |
| · Revenue lost | The amount of revenue lost for Hotai could not be a considered as concerning not for the buyer and neither for the seller both. |
| · Revenue recognition | Hotai follows IFRS accounting standards, which clearly states that the revenues could not be recognized before delivery, or the possession is transferred at the time of delivery. Therefore, in this case, the distributor has no obligation to pay for the losses as the delivery was not completed yet. |
| · Insurance covered | For goods that are under the possession of the distributor, for which the distributor is to pay the full amount, how Hotai can claim for a payment from the insurance firm. |
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