IAS 2010). Within IFRS 15 they have now incorporated

IAS 18 was based around the
transfer of risk and rewards which can cause problems when a transaction
involves both a good and service related to that good. To determine when the
risk and rewards of ownership have been transferred, the entity could consider
the transaction as a whole. This can cause problems as the entity may still
have a contractual obligation remaining to the service of the good but they
have already recognised all the revenue. For example, if someone bought a
mobile phone and it had 1 years’ warranty. Under the current standard there is
no specific guidance on how to account for warranties, therefore the revenue
wouldn’t represent the pattern of the transfer to the customer of all the goods
and services in the contract (Putra, 2010).  Within IFRS 15 they have now incorporated accounting
for warranties in their standard. It distinguishes between a warranty providing
assurance and a warranty providing additional service (Navarro Amper & Co,


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