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On the Definitions of Income and Revenue in IFRS

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  • Christopher Nobes

Abstract

In a previous issue of this journal, Richard Barker addressed some problems with the IFRS definitions of income and profit. I apply his conclusions to the definition of ‘revenue’ that he did not cover. I point out other difficulties with the definition: the implication that some sales to customers are not revenue, the implication that receipts to settle accounts receivable (or to sell receivables to a bank) are revenue, and the out-dated term ‘ordinary activities’. Most of the problems with the definition of revenue remain in the IASB's exposure drafts of 2010 and 2011. I also suggest that, despite IASB statements, fair value gains on assets should not be considered to be revenue, and nor should the financial receipts of non-financial companies. This leads to the suggestion that a replacement for IAS 18 should deal with the wider topic of ‘income’, and then define ‘revenue’ more narrowly than at present as the gross increase in equity resulting from inflows from customers for certain types of performance under contracts.

Suggested Citation

  • Christopher Nobes, 2012. "On the Definitions of Income and Revenue in IFRS," Accounting in Europe, Taylor & Francis Journals, vol. 9(1), pages 85-94, June.
    • Handle: RePEc:taf:acceur:v:9:y:2012:i:1:p:85-94
    DOI: 10.1080/17449480.2012.664395
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    Cited by:

    1. Malikov, Kamran & Manson, Stuart & Coakley, Jerry, 2018. "Earnings management using classification shifting of revenues," The British Accounting Review, Elsevier, vol. 50(3), pages 291-305.
    2. Kateřina Knorová, 2016. "Do Czech Companies Disclose Revenue in Accordance with IFRS Requirements?," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2016(3), pages 69-84.
    3. Catherine Grima, 2015. "Impact Des Normes Ifrs Sur Le Compte De Resultat Et Le Bilan Des Entreprises Françaises Cotees : Une Approche Par Les Doubles Differences," Post-Print hal-01188720, HAL.
    4. Adil Laouane Laouane & Mohamed Torra, 2022. "The impact of the adoption of IFRS on turnover: a comparative analysis with the Moroccan accounting framework [L’impact de l’adoption des normes IFRS sur le chiffre d’affaires: une analyse comparat," Post-Print hal-03639461, HAL.

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