On 1st January 2016, Mr. S sold goods to Mr. B for AED 100,000 and agreed to receive payments on installment of AED 10,000 per year. Market rate of interest is 10%. As per IAS 18, What is the accounting treatment of the above transaction for year 2016 and 2017?

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Where payment is deferred , the substance of the arrangement is that there is both a sale and a financing transaction. Under international accounting standard eighteen, It is already necessary to discount the consideration to present value in order to arrive at fair value.

The difference between the fair value and the nominal amount of the consideration is recognised as interest, in accordance with paragraph twenty nine and thirty and and in accordance with  international accounting standard thirty nine financial instrument; recognition and measurement

Therefore  the AED ten thousand in twenty sixteen will be discounted at ten percent to find the fair value and the AED ten thousand payable in twenty seventeen will also be discount at ten percent to find the fair value for that year. The fair values will be record as revenue in each year and the interest will be recognised as mentioned above.