IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition

IPSAS 9: Revenue from Exchange Transactions

Objective

This standard prescribes the accounting treatment of revenue arising from exchange transactions and events, the main question being when to recognize revenue. Revenue is recognized when it is probable that future economic benefits or service potential will flow to the entity and these benefits can be measured reliably. IPSAS 9 identifies those circumstances in which these criteria are satisfied and when revenue needs to be recognized accordingly. It also provides practical guidance on the application of these criteria.

The IFRS on which the IPSAS is based

IAS 18, Revenue

Content

Principal definitions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets/equity, other than increases relating to contributions from owners.

Exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another entity in exchange. Typical exchange transactions are the purchase or sale of goods or services based on market prices.

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity ...