Revenue from Contracts with Customers

In April 2001 the International Accounting Standards Board (Board) adopted IAS 11 Construction Contracts and IAS 18 Revenue, both of which had originally been issued by the International Accounting Standards Committee (IASC) in December 1993. IAS 18 replaced a previous version: Revenue Recognition (issued in December 1982). IAS 11 replaced parts of IAS 11 Accounting for Construction Contracts (issued in March 1979).

In December 2001 the Board issued SIC-31 Revenue—Barter Transactions Involving Advertising Services. The Interpretation was originally developed by the Standards Interpretations Committee of the IASC to determine the circumstances in which a seller of advertising services can reliably measure revenue at the fair value of advertising services provided in a barter transaction.

In June 2007 the Board issued IFRIC 13 Customer Loyalty Programmes. The Interpretation was developed by the IFRS Interpretations Committee (the ‘Interpretations Committee’) to address the accounting by the entity that grants award credits to its customers.

In July 2008 the Board issued IFRIC 15 Agreements for the Construction of Real Estate. The Interpretation was developed by the Interpretations Committee to apply to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors.

In January 2009 the Board issued IFRIC 18 Transfers of Assets from Customers. The Interpretation was developed by the Interpretations Committee to apply to the accounting for transfers of items of property, plant and equipment by entities that receive such transfers from their customers.

In May 2014 the Board issued IFRS 15 Revenue from Contracts with Customers, together with the introduction of Topic 606 into the Financial Accounting Standards Board’s Accounting Standards Codification®. IFRS 15 replaces IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC-31. IFRS 15 provides a comprehensive framework for recognising revenue from contracts with customers.

In September 2015 the Board issued Effective Date of IFRS 15 which deferred the mandatory effective date of IFRS 15 to 1 January 2018.

In April 2016 the Board issued Clarifications to IFRS 15 Revenue from Contracts with Customers clarifying the Board’s intentions when developing some of the requirements in IFRS 15. These amendments do not change the underlying principles of IFRS 15 but clarify how those principles should be applied and provide additional transitional relief.

In May 2017, the Board issued IFRS 17 Insurance Contracts which permits an entity to choose whether to apply IFRS 17 or IFRS 15 to specified fixed-fee service contracts that meet the definition of an insurance contract.

Other Standards have made minor consequential amendments to IFRS 15, including IFRS 16 Leases (issued January 2016) and Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018).

CONTENTS

from paragraph

INTERNATIONAL FINANCIAL REPORTING

STANDARD 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

OBJECTIVE 1

Meeting the objective 2

SCOPE 5

RECOGNITION 9

Identifying the contract 9

Combination of contracts 17

Contract modifications 18

Identifying performance obligations 22

Satisfaction of performance obligations 31

MEASUREMENT 46

Determining the transaction price 47

Allocating the transaction price to performance obligations 73

Changes in the transaction price 87

CONTRACT COSTS 91

Incremental costs of obtaining a contract 91

Costs to fulfil a contract 95

Amortisation and impairment 99

PRESENTATION 105

DISCLOSURE 110

Contracts with customers 113

Significant judgements in the application of this Standard 123

Assets recognised from the costs to obtain or fulfil a contract with a customer 127

Practical expedients 129

APPENDICES

A Defined terms

B Application Guidance

C Effective date and transition

D Amendments to other Standards

APPROVAL BY THE BOARD OF IFRS 15 ISSUED IN MAY 2014

APPROVAL BY THE BOARD OF AMENDMENTS TO IFRS 15:

Effective Date of IFRS 15 issued in September 2015

Clarifications to IFRS 15 Revenue from Contracts with Customers issued in April 2016

FOR THE ACCOMPANYING GUIDANCE LISTED BELOW, SEE PART B OF THIS EDITION

• ILLUSTRATIVE EXAMPLES
• APPENDIX
• Amendments to the guidance on other Standards

FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION

• BASIS FOR CONCLUSIONS
• DISSENTING OPINION
• APPENDICES TO THE BASIS FOR CONCLUSIONS
• A Comparison of IFRS 15 and Topic 606
• B Amendments to the Basis for Conclusions on other Standards

International Financial Reporting Standard 15 Revenue from Contracts with Customers (IFRS 15) is set out in paragraphs 1–129 and Appendices A–D. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in Appendix A are in italics the first time that they appear in the Standard. Definitions of other terms are given in the Glossary for International Financial Reporting Standards. The Standard should be read in the context of its objective and the Basis for Conclusions, the Preface to IFRS Standards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.