Stand-alone selling price

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Exact wording: Stand-alone selling price of a good or a service.

The price at which an entity would sell a promised good or service separately to a customer.

The best evidence of standalone selling price is the price that the entity charges for the good or service in a separate transaction with a customer. However, in many cases goods or services are sold exclusively as a package with other goods or services rather than on an individual basis (e.g. non-renewable customer support).  In these cases, the standalone selling price must be estimated. The revenue standard does not prohibit any method for estimating the standalone selling price, as long as the estimation results in an accurate representation of … Read more

How to account for revenue in a transfer of land

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Here the questions raised is how to account for revenue in a transfer of land. Or to put it more formally how to account for revenue recognition in a real estate contract that includes the transfer of land (as per IFRS 15 Revenue from Contracts with Customers) as per the same 2018 IFRS Interpretations Committee Agenda Decision.

The case

An entity has obtained a piece of land to construct a building on. How should the entity account for the sale of the land and the building to be constructed on the land. How to account for revenue in a transfer of land

The contract includes the following features: How to account for revenue in a transfer Read more

Arrangements partially in IFRS 15

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Arrangements partially in IFRS 15 is about that difficult situation of a mixed contract, parts are in IFRS 15 parts are outside IFRS 15. IFRS 15 provides accounting requirements for all revenue arising from contracts with customers. Arrangements partially in IFRS 15

They affect all entities that enter into contracts to provide goods or services to their customers, unless the contracts are in the scope of other IFRSs requirements, such as IFRS 16 the leasing standard. Arrangements partially in IFRS 15

The standard provides requirements for arrangements partially within the scope of IFRS 15 and partially within the scope of other standards, as follows:


Arrangements partially in IFRS 15

Reference:

Partially in scope – IFRS 15 7

Document your decisions in your

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Performance obligation

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Performance obligation – [IFRS 15 Appendix A – Defined terms]

Such an obligation is a promise in a contract with a customer to transfer to the customer either:

  1. a good or service (or a bundle of goods or services) that is distinct; or
  2. a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

Context Performance obligation Performance obligation Performance obligation

For revenue to be recognized, the following conditions must be satisfied:

  1. Risks and rewards have been transferred from the seller to the buyer.
  2. The seller does not have control over the goods sold.
  3. The collection of payment from goods or services is reasonably assured.
  4. The amount of revenue can
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Allocate the transaction price to the performance obligations – Engineering & Construction

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Allocate the transaction price to the performance obligations – 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.


Once the performance obligations are identified and the transaction price has been determined, IFRS 15 requires (with some exceptions, as discussed below) an entity to allocate the transaction price to the performance obligations in proportion to their stand-alone selling prices (i.e., on a relative stand-alone selling price basis).

To allocate the transaction price on a relative stand-alone selling price basis, an entity must first determine the stand-alone selling price (i.e., the price at which an entity would sell … Read more

Identify the contract with the customer

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Identify the contract with the customer – 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. Identify the contract with the customer


The model in IFRS 15 applies to each contract with a customer. Contracts may be written, oral or implied by an entity’s customary business practices, but must be legally enforceable and meet specified attributes. Identify the contract with the customer

Attributes of a contract Identify the contract with the customer

To help entities determine whether (and when) their arrangements with customers are contracts within the scope of the model in the standard, the Board … Read more

Identify Telecom industry performance obligations

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

Example one:

A telecoms company enters into a contract for the sale of a mobile device and connection to its mobile network. The contract, which lasts for two years, gives the customer:

  • X minutes of calls per month; Identify Telecom industry performance obligations
  • Y gigabytes of data per month; and Identify Telecom industry performance obligations
  • Z texts per month. Identify Telecom industry performance obligations

The telecoms company frequently sells mobile devices without connecting them to the network. Although different combinations of minute, data and texts are available, it is not possible to buy only minutes, … Read more