ASBE No. 14
Active
Revenue
Revenue is part of the Chinese Accounting Standards for Business Enterprises (ASBE).
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Conceptual Framework Linkage
A landmark, closely converged revenue standard
ASBE No. 14 was COMPREHENSIVELY revised in JULY 2017, INTRODUCING a UNIFIED five-STEP revenue RECOGNITION model – CLOSELY mirroring IFRS 15's OWN approach internationally, and REPLACING the OLDER, fragmented Chinese REVENUE framework that PREVIOUSLY split ordinary SALES revenue from CONSTRUCTION contract revenue (the LATTER governed SEPARATELY by ASBE No. 15 – see the COMPANION historical poster). This REVISION is ONE of the MOST significant "KEPT pace with the CURRENT international standard" examples WITHIN the ENTIRE ASBE suite.
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Scope
Revenue from contracts with customers
This Standard applies to REVENUE arising from CONTRACTS with CUSTOMERS for the SALE of goods or PROVISION of services in the ORDINARY course of BUSINESS – EXCLUDING leases, INSURANCE contracts, and FINANCIAL instruments, WHICH are governed by THEIR own respective STANDARDS.
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The Five-Step Model
Directly mirroring IFRS 15's structure
StepDescription
1IDENTIFY the CONTRACT with the CUSTOMER
2IDENTIFY the PERFORMANCE OBLIGATIONS (distinct PROMISES) within the CONTRACT
3DETERMINE the TRANSACTION price
4ALLOCATE the transaction PRICE to each PERFORMANCE obligation, based on RELATIVE standalone SELLING price
5RECOGNISE revenue AS (or WHEN) each PERFORMANCE obligation is SATISFIED
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Over-Time vs Point-in-Time Recognition
The successor framework to percentage-of-completion
A PERFORMANCE obligation is SATISFIED OVER TIME WHERE the CUSTOMER simultaneously RECEIVES and CONSUMES benefits AS the ENTERPRISE performs, the ENTERPRISE'S performance CREATES or ENHANCES an ASSET the customer CONTROLS as it's CREATED, or the ASSET has NO alternative USE and the ENTERPRISE has an ENFORCEABLE right to PAYMENT for performance COMPLETED to date – OTHERWISE, revenue is RECOGNISED at a SINGLE point in TIME, when CONTROL transfers.
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Absorbing Construction Contracts – the End of Percentage-of-Completion as a Separate Standard
One general model, replacing a separate construction-specific standard
BEFORE this REVISION, LONG-term construction CONTRACTS were governed SEPARATELY by ASBE No. 15, APPLYING a DEDICATED percentage-of-COMPLETION methodology DISTINCT from ORDINARY sales REVENUE recognition. The 2017 revision CONSOLIDATED both TOPICS into THIS single, UNIFIED five-step MODEL – the ECONOMIC outcome for MOST construction CONTRACTS remains BROADLY similar (revenue RECOGNISED progressively as WORK is performed), but IT is now ANALYSED through the GENERAL over-time RECOGNITION criteria (Section 4) RATHER than a SEPARATE, dedicated STANDARD.
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Variable Consideration and the Transaction Price
Estimating uncertain elements of the price
WHERE the TRANSACTION price INCLUDES a VARIABLE element (DISCOUNTS, rebates, PENALTIES, or PERFORMANCE bonuses), the ENTERPRISE estimates the EXPECTED amount USING either the EXPECTED VALUE method or the MOST LIKELY amount METHOD, INCLUDING the ESTIMATE in the TRANSACTION price ONLY to the EXTENT it is HIGHLY probable a SIGNIFICANT reversal WILL NOT occur ONCE the UNCERTAINTY is RESOLVED.
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Allocating the Transaction Price
Based on relative standalone selling price
WHERE a CONTRACT contains MULTIPLE performance OBLIGATIONS, the TRANSACTION price is ALLOCATED to EACH obligation BASED on its RELATIVE STANDALONE selling PRICE – the PRICE at WHICH the enterprise WOULD sell that GOOD or SERVICE separately.
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Worked Example – Allocating a Bundled Transaction Price
Splitting a hardware-and-service bundle
Example: Equipment sold with a maintenance package
A company sells a bundle of equipment (standalone selling price RMB 900,000) and a 1-year maintenance service (standalone selling price RMB 100,000) for a combined RMB 950,000.
The RMB 950,000 transaction PRICE is ALLOCATED based on RELATIVE standalone SELLING price: equipment = RMB 950,000 × (RMB 900,000 ÷ RMB 1,000,000) = RMB 855,000 (recognised at the POINT the equipment is DELIVERED); maintenance = RMB 950,000 × (RMB 100,000 ÷ RMB 1,000,000) = RMB 95,000 (recognised OVER the 1-year SERVICE period).
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Worked Example – Over-Time Recognition for a Construction Contract
The successor to the old percentage-of-completion method
Example: A bespoke industrial facility
A construction company builds a CUSTOM facility with NO alternative use, and an ENFORCEABLE right to payment for work completed to date, under a RMB 500,000,000 contract. By year end, 60% of the work is complete.
Since the criteria for OVER-TIME recognition are MET, the company recognises revenue of RMB 500,000,000 × 60% = RMB 300,000,000 for the year – the SAME general economic OUTCOME the OLD percentage-of-completion method under ASBE No. 15 would have PRODUCED, now analysed WITHIN this Standard's GENERAL five-step framework.
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Disclosure Requirements
What ASBE No. 14 requires
Disaggregation of revenue by categoryInformation about performance obligations, including timing of satisfactionSignificant judgements applied in determining the transaction price and its allocation
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Identifying distinct performance obligations within a bundled contractWhether a performance obligation is satisfied over time or at a point in time
SIGNIFICANT ESTIMATES
Standalone selling prices used for allocationVariable consideration estimates
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Relationship to IFRS 15
Comparison – ASBE 14 vs IFRS 15
FeatureASBE 14 (2017 revision)IFRS 15
Five-step modelYESYES – converged
Construction contractsAbsorbed into the general modelSame – IAS 11 absorbed into IFRS 15
A GENUINELY thoroughly CONVERGED revision – CHINA'S adoption CLOSELY tracked IFRS 15's OWN international TIMELINE, a CONTRAST to slower-CONVERGING topics ELSEWHERE in the ASBE suite.
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Statement Mapping
Where every revenue recognition event lands
EventStatement(s) affectedNotes
Revenue recognition (over time or point in time)IS BSBased on satisfaction of performance obligations
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Related Standards
Cross-reference map
StandardConnection
ASBE No. 15Construction Contracts – the superseded, historical standard whose substance this revision absorbed
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Quick-Reference Glossary
Performance obligation
A distinct promise within a contract to transfer a good or service to a customer, the unit of account for revenue recognition.
Standalone selling price
The price at which a good or service would be sold separately, used to allocate a bundled transaction price.
Financial statement key (Chinese GAAP / ASBE terminology)
BS Balance Sheet (资产负债表)
IS Income Statement (利润表)
SCOE Statement of Changes in Owners' Equity (所有者权益变动表)
CFS Cash Flow Statement (现金流量表)
History & Development
2006-02
ASBE No. 14 Revenue issued
Operative for periods beginning on or after 1 February 2007