Manufacturing Revenue
Code: 4140Account Information
| Financial Statement | Income Statement |
| Normal Balance | Credit |
Definition
Revenue arising from the sale of manufactured products (finished goods). This revenue is recognized upon delivery of goods to the customer and transfer of control.
Sub-accounts
📐 IFRS vs US GAAP Accounting Treatment
IFRS: Revenue is recognized at a point in time when control of the product transfers to the customer. Indicators include: customer acceptance, physical possession, risks and rewards, right to payment.
IFRS: Revenue is measured at fair value of consideration received or receivable, after deducting discounts and returns. GAAP: Same measurement with variable consideration details.
IFRS: Disclose revenue recognition policy, payment terms, return and warranty rights. GAAP: Additional disclosures on performance obligations.
Example: A manufacturer sells a product for SAR 100,000, delivered to customer. Revenue is recognized in full upon delivery (single point in time).
GAAP: Revenue recognized at point in time when control transfers.
GAAP: Revenue measured at fair value of consideration after discounts and returns.
GAAP: Additional disclosures on performance obligations.
Example: Product sale for SAR 100,000. Revenue recognized upon delivery.
IFRS (IFRS 15): Revenue is recognized when control is transferred (at a point in time). GAAP (ASC 606): Same principle but with differences in the treatment of warranty contracts and rights of return.
❓ Frequently Asked Questions
A: Recognized upon delivery of the product to the customer and transfer of control (a point in time), not upon completion of production.
A: The contract price is allocated between the product (recognized upon delivery) and the maintenance service (recognized over the contract period).