See also Examples 14, 15, 16 and 17 accompanying IFRS 15. The equipment and its installation as treated as a single performance obligation as the customer would not be able to benefit from the equipment or installation service on its own. For some goods or services, such as a piece of furniture, it is obvious that a customer will benefit from them on their own. Mais dans le cas de la parution de la norme IFRS 15, l’enjeu est tel que l’IASB a jugé utile de détailler de nombreux cas de figure («illustrative examples» ou «IE»). Deleted text is struck through and new text is underlined. IFRS 16 – baux commerciaux 3-6-9 : quelle durée de location retenir ? Excerpts from IFRS Standards come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). If a performance obligation is not satisfied over time, it must be treated as satisfied at a point in time (IFRS 15.32). IFRS- 15 with illustrative examples 1. International Financial Reporting Standard 15 Revenue from Contracts with Customers 2. At a contract inception, entities need to identify the goods or services promised in that contract. For example, entities with material leasing revenue will have to separate leasing revenue recognised under IFRS 16 from revenue from contracts with customers recognised under IFRS 15. Such an approach is not allowed under IFRS 15 (IFRS 15.BC88-BC90). Leur expression conceptuelle déroute parfois l’utilisateur des comptes. IFRS 15 Thematic (September 2020) Financial Reporting Council 2 Page 1. Amendments to IFRS 15 Revenue from Contracts with Customers Paragraphs 26, 27 and 29 are amended. So this feels like the right time to . sale of software with significant customisation). A manufacturer contracts with its customer for a production of 100,000 pieces of sporting equipment. Consequently, an entity would disregard any contractual limitations that might preclude the customer from obtaining readily available resources from a source other than the entity. Example: A series of distinct goods or services that are substantially the same. IFRS 15 - Application Example in Incremental Costs to Obtain (more details, check www.bdo.co.uk) IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets cover the accounting treatment on costs incurred in fulfilling a contract with a customer. The entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. Transfer of physical possession is another indication of transfer of control, but there are notable exceptions: Requirements relating to repurchase agreements can be summarised as follows: Transfer of significant risks and rewards of ownership of the asset is an indication of transfer of control. Executive summary 3 2. Contracts can be written, oral or implied by an entity’s customary business practices. This may be described as a change order, a variation, or an amendment. IFRS 15 only impacts the related revenue recognition, not any of the commercial terms of the arrangement. The manufacturer charges $0.5 million of up-front setup costs and $100 for each manufactured piece. Key findings • Timing of revenue recognition 5 • Variable consideration 9 • Revenue disaggregation 12 • Contract balances 13 • Significant judgements 14 • Costs to obtain or fulfil a contract 16 4. See Example 10 Case A, Example 11 Cases B/E and Example 55 and Example 56 Case B accompanying IFRS 15. For example, if the fare was £30 and the commission is £3, under IFRS 15 the £3 pound will be accounted as turnover ad the £27 posted to cost of … Les contrôles comptables Sapin 2 : une lumière au bout du tunnel, L’application de l’amendement à la norme IFRS 16 relatif aux allégements de loyers liés à la Covid-19 dans les comptes semestriels suspendue au processus d’adoption européen, En un temps record, l’IASB propose d’amender la norme IFRS 16 pour traiter les allégements de loyer liés au Covid-19, Synthèse des discussions en cours à l’IASB, L’IASB fait des propositions pour améliorer la comparabilité du compte de résultat. Certainly, the most significant difference to consider is the In addition to the goods or services explicitly stated in the contract, all implied promises (e.g. A readily available resource is defined in IFRS 15.28 as a good or service that is sold separately (by the reporting entity or third party) or a resource that the customer has already obtained from the entity (including goods or services that the entity will transfer to the customer under the contract before the good or service in question is transferred) or from other transactions or events. This is another criterion that, if met, makes a performance obligation satisfied over time. In such cases, goods or services that seem to be distinct are in fact only inputs to the combined item. Measuring progress using an input method may be based on e.g. An exception to this rule applies when the entity can objectively determine that the agreed specifications are met, such as weight or size (IFRS 15.B83-B85). Such a bundle is then treated as a single performance obligation (IFRS 15.30). EXAMPLE: REPURCHASE AGREEMENT 43 . Once the reliable measurement of progress becomes possible, the entity applies output or input methods as described above (IFRS 15.44-45). Measurement of progress can be based on the output or the input. IFRS 15 requires a series of distinct goods or services that are substantially the same with the same pattern of transfer, to be regarded as a single performance obligation. IFRS 15 requires that revenue and impairment losses arising from contracts with customers to be disclosed separately from items not arising from contracts with customers. Example: A series of distinct goods or services that are substantially the same. Entity X produces a specialised equipment which is installed at customer’s premises. Les normes IFRS sont fondées sur des principes. › IFRS 15 – Illustrative disclosures. Each car seat is a distinct good, but Entity A treats the whole contract as one performance obligation under paragraph IFRS 15.22(b). CLARIFICATIONS TO IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS—APRIL 2016 Amendments to the Illustrative Examples on IFRS 15 Revenue from Contracts with Customers Paragraphs IE45, IE47, IE50–IE51, IE55–IE57, IE61, IE63, IE225–IE227, IE230–IE232, IE237–IE238, IE240–IE245, IE247–IE248, IE275, IE277–IE280, IE286–IE287, IE290–IE294, IE296, IE299–IE300, … Post them on our Forum, The good or service is capable of being distinct, The good or service is distinct within the context of the contract, A series of distinct goods or services that are substantially the same, Performance obligations satisfied over time, Criteria for performance obligations to be satisfied over time, Customer simultaneously receives and consumes benefits, Entity’s performance creates or enhances an asset that the customer controls, Asset without an alternative use to the entity and enforceable right to payment, Measuring progress towards complete satisfaction of a performance obligation over time, Inability to measure the progress reliably, Performance obligations satisfied at a point in time, Performance obligations satisfied at a point in time as the default option, Transfer of significant risks and rewards of ownership of the asset, performance obligation satisfied over time, performance obligations satisfied over time, Performance Obligations and Timing of Revenue Recognition, Principal vs Agent, or Reporting Revenue Gross vs Net, Revenue from Licensing of Intellectual Property, Revenue from Customers’ Unexercised Rights (Breakage), Customer Loyalty Programmes and Other Options for Additional Goods or Services, the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (in other words: the good or service is capable of being distinct); and. IFRScommunity.com is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. It is also important that the right to payment is legally enforceable. In practice, this most often applies to repetitive services, such as cleaning services or transaction processing (IFRS 15.BC114). These examples represent how some of the disclosures required by IFRS 13 (in paragraphs 93 and IE60-63) in relation to fair value measurement might be tagged using detailed XBRL tagging. A car manufacturer sells its cars to a dealer and promises in the contract to provide a free maintenance to a final customer (i.e. Paragraph 10 of IFRS 15: “A contract is an agreement between two or more parties that creates enforceable rights and obligations. Output methods are covered in IFRS 15.B15-B17. Variable consideration can be included in projected cash inflow based on e.g. Entity A contracts to transport a package from Madrid to Moscow. restricted contractually from readily directing the asset for another use during the creation or enhancement of that asset or. the entity’s performance does not create an asset with an alternative use to the entity due to legal and/or practical restrictions and. Each car seat is a distinct good, but Entity A treats the whole contract as one performance obligation under paragraph IFRS 15.22(b). It is then a matter of deciding when exactly a performance obligation is satisfied, which is the date when a customer obtains control of a promised good or service (‘an asset’) (IFRS 15.38). When a contract execution comes to a point when the entity has the right to a payment, it is an indicator that the control of the asset has been passed to a customer. 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