Seasonal revenue

Learning objectives

• Determine that revenue received seasonally, cyclically or occasionally is neither anticipated nor deferred at the interim date if anticipation or deferral would not be appropriate at the end of the financial year, and distinguish this treatment from the disclosure of seasonality.L2

Normative references

• IAS 34 §37Revenues that are received seasonally, cyclically or occasionally within a financial year are not anticipated or deferred as of an interim date if anticipation or deferral would not be appropriate at the end of the entity's financial year.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• Caldrin SA sells ski equipment; according to the case, more than 60% of its annual revenue is earned in the fourth and first quarters. In the second quarter, the finance director proposes to recognise as revenue a quarter of the estimated annual revenue, that is EUR 2,500,000 out of EUR 10,000,000, "so that the quarter looks like an average year". Sales actually made in the quarter are EUR 900,000 (case data). What must Caldrin SA do?L2
• Arvon SA runs a seaside hotel. Case data: estimated annual revenue of EUR 9,600,000, of which EUR 6,100,000 in the third quarter; case assumption: revenue is earned during guests' stays. An analyst asks for each quarter to recognise EUR 2,400,000 "for comparability between quarters". Write a short note on the treatment of seasonal revenue in the interim reports of the year, distinguishing rule, case facts and professional judgement.L2