What exactly is revenue?

What IFRS accounting rule gives guidance on when revenue must be reversed?

• What I am wondering is if I buy something for 100 and sell it for 200, then latter on I buy that same thing back for 200 and sell it for 300 what is my total revenue? Is it total revenue of 500 with total cost of 300 or do I have to reverse the original sale resulting in total revenue of 300 with total cost of 100? Whatever the answer I would like to read the IFRS that covers this, what section would that be? IAS 18 goes into when to recognize revenue but not when it must be derecognized.

• Answer:

  I think it depends on whether these are truly two separate arms length transactions. If the buyback is anticipated at the time of the first sale and there are other elements attached, then the initial $200 received might be treated as a loan in effect and reversed out later. If the two events are truly unconnected though then there would be no need to treat them as anything other than separate transactions.