IFRS 15 Revenue from Contracts with Customers
International Financial Reporting Standard 15
Overview of IFRS 15
- Issued: in 2014; followed by clarifications
- Effective date: 1 January 2018
- What it does:
- It sets the principles for reporting the information about the revenues about:
- Nature;
- Amount;
- Timing;
- Uncertainties;
- It describes the five-step model for revenue recognition and provides guidance about each step:
- Identify the contract with the customer;
- Identify the performance obligations in the contract;
- Determine the transaction price;
- Allocate the transaction price to the performance obligations in the contracts;
- Recognise revenue when (or as) the entity satisfies a performance obligation.
- It provides the guidance on contract costs
- It contains further clarifications related to specific transactions such as sale of licences, warranties, repurchase agreements and other topics.
- It sets the requirements for presentation and disclosures in the financial statements.
- It sets the principles for reporting the information about the revenues about:
Articles about IFRS 15
- Summary of IFRS 15 Revenue from Contracts with Customers
- 5-step model for revenue recognition under IFRS 15 + example + journal entries + video
- IFRS 15 vs. IAS 18: Huge change is here! - this article compares the accounting under IAS 18 and IFRS 15 on a simple example.
- IFRS 15 Examples: How IFRS 15 affects your company - this article explains how certain industries (telecom, real estate and others) are affected by IFRS 15.
- Example: Construction contracts under IFRS 15 - you can learn how to account for construction contracts under IFRS 15 here (if you applied IAS 11 previously)
- Accounting for discounts under IFRS
- How to account for customer incentives under IFRS
- Principal or agent - revenue or liability?
- How to Account for Cryptocurrencies in line with IFRS - learn about accounting for cryptocurrencies and for the revenue from their "mining".
Questions and Answers
- Are contract assets and contract liabilities monetary or non-monetary? - How to account for contracts with customers in foreign currency? - with examples
- How to account for barter transactions
- How to account for the sale of gift cards
- How to account for warranties under IFRS 15
- We rent apartments and supply utilities with rent. Are we agent or principal?
- How to account for settlement discounts under IFRS 15?
- What is the difference between contract asset and trade receivable?
- How to account for the sales of software licenses with subsequent updates?
- How to determine whether the performance obligation is distinct?
- Agent’s commission when principal fails to perform- can you still recognize commission revenue from that transaction?
- Direct sales with no contract- we have no ‘contract’. Does IFRS 15 apply in this case since there is no contract?
- Retention in construction contracts- is there a significant financing component since often these payments are retained by the clients for more than one year?
- Accounting for “buy two + get one free”- can we recognize the revenue for 2 products, expenses for the same products as costs of sales and then expenses for one product as marketing expenses?
- Revenue under different Incoterms (EXW, DAP)- does the recognition of revenue depend on the specific Incoterm?
Other Resources
- IFRS Kit - learn IFRS in 150+ videos, 150+ excel case studies, quizzes, certificates
- Expected Credit Loss for Accountants - highly specialized course focused on ECL under IFRS 9 with step-by-step example related to trade receivables, many practical insights included.
