IFRS 15 Quick overview Revenue from contracts with customers

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IFRS 15 Quick overview Revenue from contracts with customers – the easy way to obtain an solid overview.

What is the objective of IFRS 15?

To establish 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.

How does IFRS 15 meet this objective?

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Practical expedient

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5 Comprehensive cash flow accounting events

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Here are 5 Comprehensive cash flow accounting events with special presentation and/or disclosure requirements under IAS 7. They are:

1 IFRS 9 Classification of cash flows arising from a derivative used in an economic hedge

Consequential amendments were not made to IAS 7 as a result of the introduction of, and subsequent changes to, IFRS 9 Financial Instruments.

A related issue which often arises in practice is the classification of cash flows that arise from a derivative that, although used economically to hedge exposures, is not designated in an IFRS 9 qualifying hedge relationship. The same issue arises under IAS 39, for those insurers that meet the criteria for, and have chosen to apply, the temporary exemption … Read more

Contract costs

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IFRS 15 for contract costs specifies the accounting treatment for costs an entity incurs to obtain and fulfil a contract to provide goods or services to customers as discussed below. An entity only applies these requirements to costs incurred that relate to a contract with a customer that is within the scope of IFRS 15.

When an entity recognises capitalised contract costs under IFRS 15, any such assets must be presented separately from contract assets and contract liabilities in the statement of financial position or disclosed separately in the notes to the financial statements (assuming they are material). Contract costs

Furthermore, entities must consider the requirements in IAS 1 on classification of current assets when determining whether their contract … Read more

Measurement basis

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Measurement basis – An identified feature of an item being measured (for example, historical cost, fair value or fulfilment value). OR

The result of measuring an asset, a liability or equity, or an item of income or expense, on a specified measurement basis. OR

The process of quantifying, in monetary terms, information about an entity’s assets, liabilities, equity, income and expenses.


Measurement basis describes various measurement bases, the information they provide and factors to consider when selecting a measurement basis. The 2010 Conceptual Framework did not include much guidance on measurement.

In developing the revised Conceptual Framework, the Board considered whether a single measurement basis should be mandated. However, it concluded that different measurement bases could provide … Read more

Leases

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Leases explained along defined terms to obtain a quick overview. An overview is provided here.

Definitions from IFRS 16 Leases are:

IFRS 16 Leases: A contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.

Lease payments – Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the following: Lease

  1. fixed payments (including in-substance fixed payments), less any lease incentives;
  2. variable lease payments that depend on an index or a rate;
  3. the exercise price of a purchase option if the lessee is reasonably certain to exercise that option;
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