Implicit promises in a contract

Goods or services that are to be transferred to a customer are normally specified in a contract.

However, a contract may also include promises that are implied by a vendor’s customary business practices, published policies, or specific statements if those promises create a valid customer expectation that the vendor will transfer a good or service to it.… Continue reading

Identify Property development obligations – Additional clause

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

The scenarios in the following example demonstrates how two transactions which are substantively very similar but have different legal contract structures are accounted for in the same way (illustrating how the accounting is not affected by the legal form of the arrangements and instead focusses on the promises made by a vendor to its customer), and how subtle … Continue reading

Identify Property development obligations – Single contract

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

The scenarios in the following example demonstrates how two transactions which are substantively very similar but have different legal contract structures are accounted for in the same way (illustrating how the accounting is not affected by the legal form of the arrangements and instead focusses on the promises made by a vendor to its customer), and how subtle … Continue reading

Identify Equipment and consumables industry obligations

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

A vendor enters into a contract to supply a customer with an item of equipment and consumables that are required to operate the equipment. The contract also requires the vendor to provide replacement consumables on specified dates over the next three years. The consumables are specific to the equipment and only produced by the vendor, although they are … Continue reading

What are enforceable contracts with customers?

The assessment of whether a contract exists for the purposes of applying IFRS 15 focuses on the enforceability of rights and obligations rather than the form of the contract (oral, implied, or written).

The assessment focuses on whether enforceable rights and obligations have been established, based on the relevant laws and regulations. This may require significant judgment in some jurisdictions or for some arrangements.… Continue reading