IFRS Standard: IFRS 15 Revenue from Contracts with Customers

In accounting, revenue is the income that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Some companies receive revenue from interest, royalti

IFRS 15 Objective and scope

Objective

1 The objective of this Standard is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.

Meeting the objective

2 To meet the objective in paragraph 1, the core principle …

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IFRS 15 Identifying the contract

Part of the main section Recognition

9 An entity shall account for a contract with a customer that is within the scope of this Standard only when all of the following criteria are met:

  1. the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their
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IFRS 15 Combination of contracts

Part of the main section Recognition

17 An entity shall combine two or more contracts entered into at or near the same time with the same customer (or related parties of the customer) and account for the contracts as a single contract if one or more of the following criteria are met:

  1. the contracts are negotiated as a package with
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IFRS 15 Contract modifications

Part of the main section Recognition

18 A contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. In some industries and jurisdictions, a contract modification may be described as a change order, a variation or an amendment. A contract modification exists when the parties to …

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IFRS 15 Identifying performance obligations

Part of the main section Recognition

22 At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer either:

  1. a good or service (or a bundle of goods or services) that is distinct; or
  2. a series of distinct goods
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IFRS 15 Satisfaction of performance obligations

Part of the main section Recognition

31 An entity shall recognise revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (ie an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

32 For each performance obligation identified in accordance with paragraphs 22–30

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IFRS 15 Measurement

46 When (or as) a performance obligation is satisfied, an entity shall recognise as revenue the amount of the transaction price (which excludes estimates of variable consideration that are constrained in accordance with paragraphs 56–58) that is allocated to that performance obligation.

Click on the section of your interest:

Determining the transaction price

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IFRS 15 Determining the transaction price

Part of the main section Measurement

47 An entity shall consider the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf …

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IFRS 15 Allocating the transaction price to performance obligations

Part of the main section Measurement

73 The objective when allocating the transaction price is for an entity to allocate the transaction price to each performance obligation (or distinct good or service) in an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the …

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IFRS 15 Changes in the transaction price

Part of the main section Measurement

87 After contract inception, the transaction price can change for various reasons, including the resolution of uncertain events or other changes in circumstances that change the amount of consideration to which an entity expects to be entitled in exchange for the promised goods or services.

88 An entity shall allocate to the performance obligations

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