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IFRS 15 Summary

The document outlines the five-step revenue model under IFRS, which includes identifying the contract, performance obligations, determining the transaction price, allocating the transaction price, and recognizing revenue. Each step has specific criteria and considerations, such as contract modifications and variable consideration. Understanding these steps is crucial for proper revenue recognition in accounting.

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53 views1 page

IFRS 15 Summary

The document outlines the five-step revenue model under IFRS, which includes identifying the contract, performance obligations, determining the transaction price, allocating the transaction price, and recognizing revenue. Each step has specific criteria and considerations, such as contract modifications and variable consideration. Understanding these steps is crucial for proper revenue recognition in accounting.

Uploaded by

leeroybradley7
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

6 FAC4863/104

NFA4863/104
ZFA4863/104

THE REST OF STUDY UNIT 14 IS BASED ON THE ASSUMPTION THAT YOU HAVE
ALREADY STUDIED THE RELEVANT CHAPTERS IN THE PRESCRIBED
TEXTBOOK.

SECTION A - ADDITIONAL INFORMATION


1. Overview of the five-step revenue model

IFRS
Step 1 – Identify the contract
A contract with a customer must meet all five criteria for 15.9
recognition as revenue.

Combination contracts 15.17


Two or more contracts with the same customer are treated as a
single contract if one of three criteria is met.

Contract modifications 15.18-21


A contract modification is accounted for as an additional contract
if two conditions are met.

Step 2 – Identify the performance obligations 15.22-.30


• Determine if the contract contains more than one peformance 15.22
Five-step revenue model

obligation.
• A performance obligation is a good or service that is distinct
(two criteria have to be met). 15.27
• Determining if a good or service is distinct is therefore critical
to identify separate performance obligations in a contract. 15.22

Step 3 – Determine the transaction price 15.47-.72


The effects of the following on the transaction price should be
considered
• Variable consideration 15.50-.59
• A significant financing component 15.60-.65
• Non-cash consideration 15.66-.69
• Consideration payable to a customer 15.70-.72

Step 4 – Allocate the transaction price to separate perfor- 15.73-.86


mance obligations (this step only applies to a contract with
more than one performance obligation)

Step 5 - Recognise revenue 15.31-.45


Recognise revenue when performance obligations are satisfied: 15.32-.34
• A good or service is transferred to a customer; and
• The customer obtains control of that good or service.
Performance obligations may be satisfied over time (measure of 15.35-.45
progress) or at a point in time.

MJM

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