IFRS 15 ............................................................................ 2036
5 IFRS 15 – IDENTIFY THE PERFORMANCE OBLIGATIONS IN THE
CONTRACT .................................................................................................. 2037
5.1
Identifying the promised goods or services in the contract ...................... 2037
5.1.1
Identifying promised goods or services that are not
identified as deliverables under legacy revenue
requirements ....................................................................................... 2042
5.1.2
Implementation questions on identifying promised goods
or services ........................................................................................... 2043
5.1.2.A
Assessing whether pre-production activities
are a promised good or service .................................. 2043
5.1.2.B
The nature of the promise in a typical stand-
ready obligation ............................................................. 2044
1960 Chapter 28
5.1.2.C
Considering whether contracts with a stand-
ready element include a single performance
obligation that is satisfied over time ......................... 2045
5.2
Determining when promises are performance obligations ....................... 2046
5.2.1
Determination of ‘distinct’ ............................................................... 2047
5.2.1.A
Capable of being distinct ............................................. 2047
5.2.1.B
Distinct within the context of the contract ............. 2048
5.2.2
Series of distinct goods or services that are substantially
the same and have the same pattern of transfer ......................... 2056
5.2.2.A
The series requirement: Consecutive transfer
of goods or services ...................................................... 2059
5.2.2.B
The series requirement versus treating the
distinct goods or services as separate
performance obligations .............................................. 2060
5.2.2.C Assessing
whether
a performance obligation
consists of distinct goods or services that are
‘substantially the same’ ................................................ 2060
5.2.2.D
When to apply the series requirement ..................... 2062
5.2.3
Examples of identifying performance obligations ...................... 2062
5.3
Promised goods or services that are not distinct ........................................ 2066
5.4
Principal versus agent considerations ........................................................... 2067
5.4.1
Identifying the specified good or service ..................................... 2069
5.4.2
Control of the specified good or service ...................................... 2070
5.4.2.A
Principal indicators ....................................................... 2073
5.4.3
Recognising revenue as principal or agent ................................... 2075
5.4.4 Examples
of
principal
versus agent assessments ......................... 2077
5.4.5
Implementation questions on principal versus agent
considerations .................................................................................... 2081
5.4.5.A
Presentation of amounts billed to customers
(e.g. shipping and handling, expenses or cost
reimbursements and taxes or other
assessments) ................................................................... 2081
5.5
Consignment arrangements ............................................................................. 2082
5.6
Customer options for additional goods or services .................................... 2082
5.6.1
Implementation questions on customer options for
additional goods or services ............................................................ 2084
5.6.1.A
Which transactions to consider when assessing
customer options for additional goods or
services............................................................................ 2084
5.6.1.B
Nature of evaluation of customer options:
quantitative versus qualitative .................................... 2084
5.6.1.C
Distinguishing between a customer option and
variable consideration .................................................. 2085
Revenue
1961
5.6.1.D
When, if ever, to consider the goods or
services underlying a customer option as a
separate performance obligation when there
are no contractual penalties ....................................... 2088
5.6.1.E
Volume rebates and/or discounts on goods or
services: customer options versus variable
consideration ................................................................. 2089
5.6.1.F
Considering the class of customer when
evaluating whether a customer option is a
material right .................................................................. 2089
5.6.1.G
Considering whether prospective volume
discounts determined to be customer options
are material rights ......................................................... 2091
5.6.1.H
Accounting for the exercise of a material right ...... 2091
5.6.1.I
Customer options that provide a material right:
Evaluating whether there is a significant
financing component ................................................... 2093
5.6.1.J
Customer options that provide a material right:
recognising revenue when there is no
expiration date .............................................................. 2093
5.7
Sale of products with a right of return .......................................................... 2093
6 IFRS 15 – DETERMINE THE TRANSACTION PRICE ................................. 2094
6.1
Presentation of sales (and other similar) taxes ............................................. 2096
6.2 Variable
consideration
......................................................................................
2097
6.2.1
Forms of variable consideration ..................................................... 2098
6.2.1.A
Implicit price concessions ........................................... 2099
6.2.1.B
Liquidated damages, penalties or
compensation from other similar clauses:
variable consideration versus warranty
provisions ........................................................................ 2101
6.2.1.C
Identifying variable consideration: undefined
quantities with fixed per unit contractual
prices ................................................................................ 210
1
6.2.1.D
If a contract is denominated in a currency
other than that of the entity’s functional
currency, should changes in the contract price
due to exchange rate fluctuations be
accounted for as variable consideration? ..................2102
6.2.1.E
Price protection or price matching clauses ..............2102
6.2.1.F
Early payment (or prompt payment) discounts ....... 2103
6.2.2
Estimating variable consideration ................................................... 2103
6.2.2.A
Situations in which an entity would not have
to estimate variable consideration at contract
inception under IFRS 15 .............................................. 2106
1962 Chapter 28
6.2.3
Constraining estimates of variable consideration ........................ 2107
6.2.3.A
Applying the constraint on variable
consideration: contract level versus
performance obligation level ....................................... 2113
6.2.3.B
Would an entity be required to follow a two-
step approach to estimate variable
consideration? ................................................................. 2113
6.2.4
Reassessment of variable consideration ........................................ 2114
6.3
Refund liabilities ................................................................................................. 2114
6.4
Rights of return ................................................................................................... 2115
6.4.1
Is an entity applying the portfolio approach practical
expedient when accounting for rights of return? .......................... 2117
6.4.2
Accounting for restocking fees for goods that are expected to
be returned ............................................................................................ 2118
6.4.3 Accounting
for
restocking costs for goods that are
expected to be returned .................................................................... 2118
6.5
Significant financing component ..................................................................... 2119
6.5.1
Examples of significant financing components ............................ 2123
6.5.2
Implementation questions on identifying and accounting
for significant financing components ............................................. 2127
6.5.2.A
Payment terms reflect reasons other than the
provision of finance ....................................................... 2127
6.5.2.B
Existence of a financing component when the
promised consideration is equal to the cash
selling price ..................................................................... 2127
6.5.2.C Accounting
for
financing components that are
not significant ................................................................. 2128
6.5.2.D
Determining whether the significant financing
component practical expedient applies to
contracts with a single payment stream for
multiple performance obligations............................... 2128
6.5.2.E
Calculating the adjustment to revenue for
significant financing components ................................. 2129
6.5.2.F
Allocating a significant financing component
when there are multiple performance
obligations in a contract ............................................... 2129
6.5.2.G
Significant financing components: considering
whether interest expense can be borrowing
costs eligible for capitalisation .................................... 2130
6.5.3
Financial statement presentation of financing component ....... 2131
6.6
Non-cash consideration .................................................................................... 2132
6.6.1
Non-cash consideration implementation considerations .......... 2134
6.7
Consideration paid or payable to a customer ............................................... 2135
Revenue
1963
6.7.1
Determining who is an entity’s customer when applying
the requirements for consideration payable to a customer ....... 2137
6.7.2
Classification of different types of consideration paid or
payable to a customer ........................................................................ 2137
6.7.3
Forms of consideration paid or payable to a customer .............. 2137
6.7.3.A
Payments to a customer that are within the
scope of the requirements for consideration
payable to a customer ................................................... 2139
6.7.4
Timing of recognition of consideration paid or payable to
a customer ............................................................................................ 2139
6.7.4.A
Accounting for upfront payments to a
customer .......................................................................... 2141
6.8
Non-refundable upfront fees ........................................................................... 2141
6.8.1
Implementation questions on non-refundable upfront fees ...... 2143
6.8.1.A
Recognition period for a non-refundable
upfront fee that does not relate to the transfer
of a good or service ....................................................... 2143
6.8.1.B
Determining whether a contract that includes
a non-refundable upfront fee for establishing a
connection to a network is within the scope of
IFRS 15 ............................................................................. 2143
6.8.1.C
Factors to consider when non-refundable
upfront fees received for establishing a
connection to a network are within the scope
of IFRS 15 ......................................................................... 2144
6.9
Changes in the transaction price ..................................................................... 2145
7 IFRS 15 – ALLOCATE THE TRANSACTION PRICE TO THE
PERFORMANCE OBLIGATIONS ................................................................... 2146
7.1
Determining stand-alone selling prices .......................................................... 2146
7.1.1
Factors to consider when estimating the stand-alone
selling price .......................................................................................... 2148
7.1.2
Possible estimation approaches ....................................................... 2149
7.1.3 Updating
estimated
stand-alone selling prices ............................. 2152
7.1.4 Additional
considerations for determining the stand-alone
selling price .......................................................................................... 2153
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7.1.4.A
When estimating the stand-alone selling price,
does an entity have to consider its historical
pricing for the sale of the good or service
involved? .......................................................................... 2153
7.1.4.B
When using an expected cost plus margin
approach to estimate a stand-alone selling
price, how would an entity determine an
appropriate margin?....................................................... 2154
1964 Chapter 28
7.1.4.C Estimating
the
stand-alone selling price of a
good or service: estimating a range of prices
versus identifying a point estimate ............................. 2154
7.1.4.D Evaluating
a
contract where the total
transaction price exceeds the sum of the
stand-alone selling prices ............................................. 2155
7.1.5
Measurement of options that are separate performance
obligations ............................................................................................ 2155
7.1.5.A
Could the form of an option (e.g. a gift card
versus a coupon) affect how an option’s stand-
alone selling price is estimated? .................................. 2158
7.1.5.B
Use of the practical alternative when not all of
the goods or services in the original contract
are subject to a renewal option ................................... 2159
7.2
Applying the relative stand-alone selling price method ............................. 2159
7.2.1
Allocating the transaction price in a contract with multiple
performance obligations in which the entity acts as both a
principal and an agent ....................................................................... 2160
7.3
Allocating variable consideration .................................................................... 2161
7.3.1
Implementation questions on the variable consideration
allocation exception ........................................................................... 2166
7.3.1.A
In order to meet the criteria to allocate
variable consideration entirely to a specific
part of a contract, must the allocation be made
on a relative stand-alone selling price basis? ........... 2166
7.4
Allocating a discount .......................................................................................... 2166
7.4.1
Implementation questions on the discount allocation
exception .............................................................................................. 2169
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 387
