UITF Abstract 40 Revenue Recognition and Service Contracts

UITF Abstract 40 has been superseded by FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland for accounting periods beginning on or after 1 January 2015. For more information visit:

• icaew.com/newukgaap

Synopsis

The consensus applies to all contracts for services:

• Where there are distinguishable phases of a single contract it may be appropriate to account for the contract as two or more separate transactions.
• Contracts for services should be accounted for as long-term contracts, where contract activity falls into different accounting periods, unless they involve the provision of a single service. 
• Where the substance of the contract is that it is performed gradually over time revenue should be recognised as contract activity progresses.
• Where the substance of the contract is that the right to consideration does not arise until the occurrence of a critical event revenue is not recognised until that event occurs.

• Read UITF Abstract 40 (PDF 20KB/6 pages) 

Last updated 21 June 2015