IFRS 15 Objective and scope

Last Updated on 06/03/2020 by 75385885

IFRS 15 Revenue from Contracts with CustomersIFRS 15 Objective and scopeutual entities and Contract alone

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 of this Standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.… Read more

IFRS 15 Identifying the contract

Last Updated on 06/03/2020 by 75385885

IFRS 15 Revenue from Contracts with CustomersIFRS 15 Identifying the contract

IFRS 15 Identifying the contract

Identifying the contract

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 respective obligations;
  2. the entity can identify each party’s rights regarding the goods or services to be transferred;
  3. the entity can identify the payment terms for the goods or services to be transferred;
  4. the contract has commercial substance (ie the risk, timing or amount of the
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IFRS 15 Measurement

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from contracts with customersIFRS 15 Measurement

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.

Determining the transaction price

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 of third parties (for example, some … Read more

IFRS 15 Contract costs

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from contracts with customersIFRS 15 Contract costs

IFRS 15 Contract costs

Incremental costs of obtaining a contract

91 An entity shall recognise as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs.

92 The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission).

93 Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly … Read more

IFRS 15 Presentation

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from contracts with customersIFRS 15 Presentation

IFRS 15 Presentation

105 When either party to a contract has performed, an entity shall present the contract in the statement of financial position as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment. An entity shall present any unconditional rights to consideration separately as a receivable.

106 If a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (ie a receivable), before the entity transfers a good or service to the customer, the entity shall present the contract as a contract liability when the payment is made or … Read more

IFRS 15 Disclosure

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from contracts with customersIFRS 15 Disclosure

IFRS 15 Disclosure

110 The objective of the disclosure requirements is for an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. To achieve that objective, an entity shall disclose qualitative and quantitative information about all of the following:

  1. its contracts with customers (see paragraphs 113–122);
  2. the significant judgements, and changes in the judgements, made in applying this Standard to those contracts (see paragraphs 123–126); and
  3. any assets recognised from the costs to obtain or fulfil a contract with a customer in accordance with paragraph 91 or 95
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IFRS 15 Appendix B Application Guidance

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from Contracts with CustomersIFRS 15 Appendix B Application Guidance

IFRS 15 Appendix B Application Guidance

This appendix is an integral part of the Standard. It describes the application of paragraphs 1–129 and has the same authority as the other parts of the Standard.

B1 This application guidance is organised into the following categories:

  1. performance obligations satisfied over time (paragraphs B2–B13);
  2. methods for measuring progress towards complete satisfaction of a performance obligation (paragraphs B14–B19);
  3. sale with a right of return (paragraphs B20–B27);
  4. warranties (paragraphs B28–B33);
  5. principal versus agent considerations (paragraphs B34–B38);
  6. customer options for additional goods or services (paragraphs B39–B43);
  7. customers’ unexercised rights (paragraphs
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IFRS 15 Performance obligations satisfied over time

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from contracts with customersIFRS 15 Performance obligations satisfied over time

IFRS 15 Performance obligations satisfied over time

This appendix is an integral part of the Standard. It describes the application of paragraphs 1–129 and has the same authority as the other parts of the Standard.

Application guidance

B2 In accordance with paragraph 35, a performance obligation is satisfied over time if one of the following criteria is met:

  1. the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs (see paragraphs B3–B4);
  2. the entity’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced (see paragraph B5); or
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IFRS 15 Methods for measuring progress to completion

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from contracts with customersIFRS 15 Methods for measuring progress to completion

IFRS 15 Methods for measuring progress to completion

Methods for measuring progress towards complete satisfaction of a performance obligation

B14 Methods that can be used to measure an entity’s progress towards complete satisfaction of a performance obligation satisfied over time in accordance with paragraphs 35–37 include the following:

  1. output methods (see paragraphs B15–B17); and
  2. input methods (see paragraphs B18–B19).

Output methods

B15 Output methods recognise revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract. Output methods include methods such as surveys of performance completed … Read more

IFRS 15 Sale with a right of return

Last Updated on 03/02/2020 by 75385885

IFRS 15 Revenue from contracts with customersIFRS 15 Sale with a right of return

IFRS 15 Sale with a right of return

B20 In some contracts, an entity transfers control of a product to a customer and also grants the customer the right to return the product for various reasons (such as dissatisfaction with the product) and receive any combination of the following:

  1. a full or partial refund of any consideration paid;
  2. a credit that can be applied against amounts owed, or that will be owed, to the entity; and
  3. another product in exchange.

B21 To account for the transfer of products with a right of return (and for some services that are provided subject to a refund), an entity shall … Read more