Financial Reporting

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Q7. Revenue is the gross inflow of economic benefits during the period arising from the course of the ordinary activities of an entity when those inflows re.sult in increases in equity, other than increases relating to contributions from equity participants.

Required:

Explain the importance of a contract in the revenue recognition process. (5 m)

(b) What is a performance obligation? When must multiple performance obligations in a revenue arrangement be accounted for separately? (5 m)