A cousin of yours, who runs a business, DLLA Limited, is looking for some advice in relation to the recognition of revenue in financial statements. They have heard of IFRS 15 Revenue but are unsure how to apply it to their business. They have asked for your advice as they know that you are currently studying to be an accountant. Your cousin has asked you to provide a report to him on the following queries:

(a) Describe the conditions that should be satisfied before Revenue from the rendering of services should be recognised in the financial statements.

(10 Marks)

(b) State how Revenue should be measured in the financial statements. (3 Marks)

(c)Discuss, under the following examples, what the accounting treatment should be and whether Revenue should be recognised or not in the financial statements for the year-end 31 December 2010:

(i) On 18 December 2010, DLLA had received ZMK10, 000,000 in relation to goods which are due to be shipped on 6 January 2011 to Burundi. At the year-end, the goods are still in the warehouse of DLLA Limited.