IFRS 15: Revenue Recognition
IFRS 15 establishes a single, comprehensive framework for determining when and how much revenue to recognize. It replaces IAS 18 and IAS 11.
The 5-Step Model
- Identify the contract with a customer.
- Identify the performance obligations in the contract.
- Determine the transaction price.
- Allocate the transaction price to the performance obligations.
- Recognize revenue when (or as) the entity satisfies a performance obligation.
Percentage of Completion Calculator
For obligations satisfied over time (e.g., construction).
Revenue: $1,875,000
Specific Complexities
Variable Consideration: Must be estimated using either the 'expected value' or 'most likely amount' method. Crucially, variable consideration is only recognized if it is highly probable that a significant reversal will not occur.
FAQs
What is a distinct performance obligation?
A good or service is distinct if the customer can benefit from it on its own (or with readily available resources) and the promise to transfer it is separately identifiable in the contract.
Related Resources
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