IFRS 15 Revenue Disclosures Examples

IFRS 15 Revenue Disclosures Examples

IFRS 15 Revenue Disclosures Examples provides the context of disclosure requirements in IFRS 15 Revenue from contracts with customers and a practical example disclosure note in the financial statements. However, as this publication is a reference tool, no disclosures have been removed based on materiality. Instead, illustrative disclosures for as many common scenarios as possible have been included.

Please note that the amounts disclosed in this publication are purely for illustrative purposes and may not be consistent throughout the example disclosure related party transactions.

Users of the financial statements should be given sufficient information to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. To achieve this, entities must provide qualitative and quantitative information about their contracts with customers, significant judgements made in applying IFRS 15 and any assets recognised from the costs to obtain or fulfil a contract with customers. [IFRS 15.110]

Disaggregation of revenue

[IFRS 15.114, IFRS 15.B87-B89]

Entities must disaggregate revenue from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. It will depend on the specific circumstances of each entity as to how much detail is disclosed. The Reporting entity Plc has determined that a disaggregation of revenue using existing segments and the timing of the transfer of goods or services (at a point in time vs over time) is adequate for its circumstances. However, this is a judgement and will not necessarily be appropriate for other entities.

Other categories that could be used as basis for disaggregation include:IFRS 15 Revenue Disclosures Examples

  1. type of good or service (eg major product lines)
  2. geographical regions
  3. market or type of customer
  4. type of contract (eg fixed price vs time-and-materials contracts)
  5. contract duration (short-term vs long-term contracts), or
  6. sales channels (directly to customers vs wholesale).

When selecting categories for the disaggregation of revenue entities should also consider how their revenue is presented for other purposes, eg in earnings releases, annual reports or investor presentations and what information is regularly reviewed by the chief operating decision makers. [IFRS 15.B88]

Read more

IFRS 15 Contracts with customers

IFRS 15 Contracts with customers defines a contract as an agreement between two or more parties that creates enforceable rights and obligations.

Based on IFRS 15.9, an entity should account for a contract with a customer that is within its scope only when all of the following criteria are met:

  1. The parties to the contract have approved the contract and are committed to perform their respective obligations.IFRS 15 Contracts with customers
  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. IFRS 15 Contracts with customers
  5. It is probable that the entity will collect substantially all of the
Read more

The five contract identification criteria

IFRS 15 9 Revenue from Contracts with Customers is applied to contracts with customers that meet all of the five contract identification criteria

Highly probable

IFRS Definition Highly probable: Significantly more likely than probable. IFRS Definition Probable: More likely than not. And other probability qualifications

Rebuttable presumption significant increase in credit risk

Rebuttable presumption significant increase in credit risk IFRS 9 contains a presumption credit risk has increased when payments are more than 30 days past due.