Statements of Financial Accounting Standards No. 32

	Statements of Financial Accounting Standards In Taiwan

SFAS No. 32 Revenue

Status

Revised by the Financial Accounting Standards Committees In Taiwan on 22 September 2005
　

Summary

Revenue Recognition

The purpose of this Standard is to establish accounting standards for revenue recognition resulting from the following transactions and events:

(a) the sale of goods;

(b) the rendering of services; and

Revenue referred in this Statement is defined as the gross inflow of economic benefits to an enterprise during the accounting period resulting in increases in equity. Such inflows arise from the sale of goods, the rendering of services and providing of enterprise assets for use by others. Although contributions from shareholders also increase equity, they are not revenue.

Revenue should be measured at the fair value of the agreed-upon consideration (after taking into account the amount of any trade discounts and volume discounts) between the enterprise and its buyer or user.

Sale of goods

Revenue from the sale of goods should be recognized if all of the following conditions are met:

(a) the enterprise has transferred significant risks and rewards of ownership of the

goods to the buyer;

(b) the enterprise neither continues managerial involvement of the goods sold, nor

maintains effective control;

(d) it is probable that the economic benefits related to the transaction will flow to the

enterprise; and

(e) the costs incurred and to be incurred associated with the transaction can be measured

reliably.

Rendering of services

When the transaction outcome of rendering of services can be reasonably estimated, revenue should be recognized according to the degrees of completion of the transaction on the balance sheet date. The transaction outcome can be reasonably estimated if all of the following conditions are met:

(a) the amount of the revenue can be measured reliably;

(b) it is probable that the economic benefits related to the transaction will flow to the

enterprise;

measured reliably; and

(d) the degree of completion for the transaction can be measured reliably on the balance

sheet date.

When the outcome of the service performed by an enterprise cannot be reasonably estimated, the possibility of recovery of the incurred costs should be considered in recognizing revenue. If it is probable that the incurred costs can be recovered, revenue is recognized to the extent of the recoverable incurred costs; if it is not probable that the incurred costs can be recovered, revenue should not be recognized and the incurred costs should be expensed in the current period.

Interest, royalties and dividends

Revenue arising from enterprise assets used by others generating interest, royalties and dividends should be recognized as revenue when all of the following conditions are met:

(a) it is probable that the economic benefits related to the transaction will flow to the

enterprise; and

(b) the amount of the revenue can be measured reliably.

Interest, royalties and dividends should be recognized as revenue in accordance with the following bases respectively:

(a) interest should be recognized over the period by applying the interest rate method;

however, if the straight-line method generates similar results, it may be applied;

(b) dividends should be recognized on the ex-dividend date or the shareholder meeting

date;and

of the relevant contract.

This Statement also specifies disclosures about revenue.


	Effective date

This Statement becomes effective for financial statements for the fiscal year ending on and after December 31, 2003. Earlier adoption is allowed.

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