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    Ifrs 15 3 PDF

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    PwC Vietnam Services Audit & assurance services

    IFRS 15: Revenue


    from Contract with
    Customers

    About IFRS 15

    International Financial Reporting Standard


    (IFRS) 15: Revenue from Contracts with
    Customers was introduced by the International
    Accounting Standards Board to provide one
    comprehensive revenue recognition model for
    all contracts with customers to improve
    comparability within industries, across
    industries, and across capital markets.

    The new rules on revenue recognition became


    effective from 1 January 2018 and it replaces
    former revenue recognition standards ( IAS 11 -
    Construction Contracts, IAS 18 - Revenues)
    and most of other revenue recognition
    guidance (IFRIC 13 - Customer Loyalty
    Programmes, IFRIC 15 - Agreements for the
    Construction of Real Estates, IFRIC 18 -
    Transfers of Assets from Customers, and SIC
    31 - Revenue - Barter Transactions Involving
    Advertising Services).

    For many companies the impact will be


    manageable. But for those with large numbers
    of customer contracts, diverse or constantly
    changing terms, the impact could be significant
    unless action has been taken to mitigate the
    impact of IFRS 15.

    Here's what you need to know:

    Why it matters Some of the impact you could face

    What should you consider Next steps

    It replaces all existing revenue recognition


    under the International Financial Reporting
    Standards

    It may result in a substantial change in the


    amount and timing of revenue recognition

    Significantly more qualitative and


    quantitative disclosures are required

    5-step model

    The core principle of IFRS 15 is that revenue is


    recognised when the goods or services are
    transferred to the customer, at the transaction
    price. Revenue is recognised in accordance
    with that core principle by applying a 5-step
    model as shown below.

    Separate Determine Allocate Reco


    perfor- transac- transac- nise
    mance tion price tion price enu
    obliga-
    tions

    Step 3: Determine the


    transaction price
    Transaction price is the amount of the
    consideration an company is entitled to
    receive in exchange for transferring goods
    or services to customers.

    Determining the transaction price is


    straightforward when the contract price is
    fixed: it becomes more complex when it is
    not fixed.

    Discounts, rebates, refunds, credits,


    incentives, performance bonuses, and price
    concessions could cause the amount of
    consideration to be variable.

    In situations where there are variable


    considerations, transaction price is
    estimated based on the expected value or
    the most likely amount but is constrained
    up to the amount that is highly probable of
    no significant reversal in the future.

    The minimum amount that meet this criteria


    is included in the transaction price.

    Assess your experience with similar types


    of performance obligations in making this
    determination.

    Interested in IFRS alert?


    Subscribe here!

    Useful resources

    IFRS 15: revenue reporting’s global


    makeover

    Read our expert's insights on IFRS 15

    PwC's IFRS 15 the basics –


    Introduction to the standard

    The PwC revenue specialists have started a


    new series of videos covering IFRS 15:
    Revenue from Contracts with Customers. The
    short video series are intend to quickly help you
    understand IFRS 15. This first video covers the
    basic principles including the 5 step model in
    IFRS 15.

    We are a community of
    solvers combining human
    ingenuity, experience and
    technology innovation to
    deliver sustained outcomes
    and build trust.

    It all adds up to The New


    Equation.

    See how The New Equation can solve for you

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