The perfect 5 step-by-step revenue model

The perfect 5 step-by-step revenue model -IFRS 15 Revenue from Contracts with Customers was issued on 28 May 2014. It supersedes:

  • IAS 18 Revenue; The perfect 5 step-by-step revenue model
  • IAS 11 Construction contracts; The perfect 5 step-by-step revenue model
  • IFRIC 13 Customer Loyalty Programmes; The perfect 5 step-by-step revenue model
  • IFRIC 15 Agreements for the Construction of Real Estate; The perfect 5 step-by-step revenue model
  • IFRIC 18 Transfers of Assets from Customers; and The perfect 5 step-by-step revenue model
  • SIC-31 Revenue – Barter Transactions Involving Advertising Services. The perfect 5 step-by-step revenue model

IFRS 15 will improve comparability of reported revenue over a range of industries, companies and geographical areas globally.

IFRS 15’s objective is to establish principles that … Read more

IAS 36 Best brilliant impairment of telecom assets

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IAS 36 Best brilliant impairment of telecom assets sets out the procedures that an entity should follow to ensure that it carries its assets at no more than thIAS 36 Best brilliant impairment of telecom assetseir recoverable amount. Recoverable amount is the higher of the amount to be realised through using or selling the asset.

Where the carrying amount exceeds the recoverable amount, the asset is impaired and an impairment loss must be recognised.

The standard details the circumstances when an impairment loss should be reversed, and also sets out required disclosures for impaired assets, impairment losses, reversals of impairment losses as well as key estimates and assumptions used in measuring the recoverable amounts of cash-generating units (CGUs) that contain goodwill or intangible … Read more

IFRS 15 Presentation in main statements

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IFRS 15 Presentation in main statements – While an entity must provide sufficient information to meet the objective, the disclosures described in the standards are not intended to be a checklist of minimum requirements. That is, entities do not need to include disclosures that are not relevant or are not material to them. In addition, an entity does not need to disclose information in accordance with the revenue standards if it discloses that information in accordance with another standard.

Entities are required to consider the level of detail necessary to satisfy the disclosure objective and the degree of emphasis to place on each of the various requirements. The level of aggregation or disaggregation of disclosures requires judgement. … Read more

Loss-making or onerous construction contracts

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Loss-making or onerous construction contracts – This part relates to a complete explanation of IFRS 15 Revenue from contracts with customers in respect of Engineering & Construction contracts, see Revenue from Engineering & Construction contracts. Loss-making or onerous construction contracts

IFRS 15 does not provide specific guidance on loss-making contracts, which are instead within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The consideration in such cases is that a present obligation exists as a result of a past obligating event—the entity is contractually required to pay out resources for which it will not receive commensurate benefits. So, if an entity has a contract that is onerous, the entity recognises … Read more

Service Concession Arrangements

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Illustrative examples Service Concession Arrangements

These examples accompany, but are not part of, IFRIC 12.

Example 1: The grantor gives the operator a financial asset

Arrangement terms Service Concession Arrangements

IE1 The terms of the arrangement require an operator to construct a road—completing construction within two years—and maintain and operate the road to a specified standard for eight years (ie years 3–10). The terms of the arrangement also require the operator to resurface the road at the end of year 8—the resurfacing activity is revenue-generating.

At the end of year 10, the arrangement will end. The operator estimates that the costs it will incur to fulfil its obligations will be:

Table 1.1 Contract costs Service Concession Read more

Contract costs from Contracts with Customers

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Contract costs from Contracts with Customers – IFRS 15 Revenue from Contracts with Customers (contents page is here) introduced a single and comprehensive framework which sets out how much revenue is to be recognised, and when. The core principle is that a vendor should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the vendor expects to be entitled in exchange for those goods or services. See a summary of IFRS 15 here. Contract costs from Contracts with Customers

Contract costs are initially recognised as an asset and expensed on a systematic basis that is consistent with the transfer to the … Read more