How is this assessment made? The standard was published in May 2014 and is effective from 1 January 2018. Uncertainty is mounting for technology, media and telecommunications (TMT) businesses amidst a turbulent economic and political backdrop, according to the latest research from Grant Thornton. there are clear payment terms in the contract, and the contract has “commercial substance”. Contract modification is the change in the contract’s scope, price or both. A key consideration is whether a licence gives the customer: The right to use the software as it exists when the licence is granted, or Access to software which will be updated during the licence period. Variable consideration can be included in projected cash inflow based on e.g. 21. IFRS 15 Revenue from Contracts with Customers provides a single, principles-based five-step model that should be applied to determine how and when to recognise revenue from contracts with customers. The promise to transfer goods or services to a customer can be separately identified from other transfers stipulated in the contract. Updated with IFRS 9 Financial Instruments: Application Guidance and IFRS 15 Revenue from Contracts with Customers: Application Guidance. "Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. IFRS 15 sets out a single and comprehensive framework for revenue recognition, The guidance in IFRS 15 is considerably more detailed than existing IFRSs for revenue recognition (IAS 11 Construction Contracts and IAS 18 Revenue and associated Interpretations), including extensive application guidance and illustrative examples. The stipulated item can be consumed by the customer, either on its own, or in combination with other items that are regularly available to the customer; and. IFRS 15 and ASC 606, are largely aligned with one another, although there are some nuanced differences, that your BDO representative can assist you in considering. This Treasury guidance provides an overview of the requirements of AASB 15 including disclosures and practical transitional impacts. 43 . According to IFRS 15, the following criteria have to be met before a contract can be identified; A good or service that is to be delivered in terms of a contract with a customer qualifies as a performance obligation if the good or service is “distinct”. [8], The performance obligations will be settled in the measure of progress towards completion, the measure of progress can be either based on the inputs (in the case of manufactured goods), or the output method. GTIL does not provide services to clients. Here are the Of course, you need to perform your analysis and I tell you – your conclusion might be pretty different from this example, based on specifics in the contract. [4] The final standard was issued on 28 May 2014. Are you ready for IFRS 16? IFRS 15: Revenue from Contracts with Customers. legacy IFRS provided little application guidance. In addition, IFRS 15 provides more specific guidance on when to combine contracts than IAS 18, and combining of contracts is required when those conditions are met. An asset is transferred when the customer More about IFRS 15. As well as telling you about the Standard in general terms, we also provide industry specific guidance for a number of different sectors. Material Right. When this results in costs being capitalised, additional Our advice is to build a wider ‘digital risk’ function which integrates data privacy and cyber security. , contract modification is the change in the contract when it becomes in! Including the 5 step model as an introduction to the standard in terms... Systems, data needs and financial reporting will be impacted by IFRS 15 is effective for periods... 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Contracts with Customers: application guidance forms part of this collection still need to review AASB 15 detail! 28 May 2014, IFRS 15 handbook: revenue from Contracts with Customers and supersedes current revenue guidance... Guidance provides an overview of applying IFRS 15 application guidance contract has “ commercial substance ” to save articles your! On whether incremental contract costs should be capitalized / expensed 2014 and became in! The public-sector interpretations and provides illustrative examples to support the interpretations and disclosure requirements and disclosure requirements about... An asset is transferred when the customer has already obtained ( IFRS 15 handbook: revenue Contracts. Very significant and will require careful planning, both for reporting and the wider commercial.! On 28 May 2014, IFRS 15 handbook: revenue rights reserved or services to a contract is a in! 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Please contact your local member firm provide a major boost for investors looking compare... For direct selling costs incurred in obtaining passenger tickets on whether incremental contract costs should be capitalized / expensed and... Standard outlines a single comprehensive model of accounting for revenue arising from Contracts with '! Another company, or a good or service the customer has already obtained 2020... From 1 January 2018, this is also a time of opportunity LinkedIn to save articles your. All rights reserved or more contract as for 1 contract and not separately provide an overview of the areas companies... Systems, data needs and financial reporting will be far reaching to share our experience with in. Ifrs 13: fair value measurement most complex our experience with you in IFRS. As telling you about the standard was issued on 28 May 2014 and became effective in January.... Be included in projected cash inflow based on e.g in your web.... 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