IFRS 15 lay down the method and timing of revenue recognition under IFRS and provide detailed and more relevant disclosures to the users of the financial statements.
Application of the Standard is mandatory for annual reporting periods starting from 1 January 2018 onwards with early application permitted.
The standard establishes the principles that Entities under IFRS must apply in order to report useful information to the uses of the financial statements regarding the amount, timing, uncertainty and nature of the cash flows and revenue arising from contract with customers.
IFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for: leases within the scope of IAS 17 Leases;
- financial instruments and other contractual rights or obligations within the scope of IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures;
- insurance contracts within the scope of IFRS 4 Insurance Contracts;
- and non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers.
The core principle of IFRS 15 is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The five-step model framework
- Identify the contract(s) with a customer
- Identify the performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the performance obligations in the contract
- Recognise revenue when (or as) the entity satisfies a performance obligation.
We provide proactive assistance in the implementation of IFRS. For our clients for accounting and financial reporting services our assistance is included in our tailored solutions to ensure the cost is not prohibitive to our clients.
For more information contact us at email@example.com