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At a glance

  • IFRS 15 applies a five-step revenue model to contracts with customers.
  • You identify the contract, identify performance obligations, determine the transaction price, allocate that price, and recognize revenue as obligations are satisfied.
  • The standard places heavy weight on transfer of control, variable consideration constraints, and disclosure quality.

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In plain language

If you sell goods or services under customer contracts, IFRS 15 gives you one core logic for deciding when revenue should appear. The question is not only whether you have invoiced. The question is whether you have transferred the promised good or service in a way that gives the customer control.

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Who this applies to

IFRS 15 applies to entities with revenue from contracts with customers, except where another standard has priority, such as leases, insurance contracts, and certain financial-instrument arrangements.

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Core principles

  1. Identify the contract with the customer.
  2. Identify each distinct performance obligation.
  3. Determine the transaction price.
  4. Allocate the transaction price to the performance obligations.
  5. Recognize revenue when, or as, each obligation is satisfied.

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Recognition, measurement, presentation, and disclosure

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Recognition

Revenue is recognized when control transfers. That may happen at a point in time or over time, depending on the nature of the promise and how the customer receives the benefit.

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Measurement

You measure revenue using the transaction price, adjusted for items such as variable consideration, financing components, non-cash consideration, and amounts payable to customers. The constraint on variable consideration is critical because it limits revenue to amounts that are not likely to reverse materially.

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Presentation

Contract assets, receivables, and contract liabilities should be presented distinctly so the user can tell whether your right or obligation depends on something other than the passage of time.

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Disclosure

The disclosure package is designed to explain the nature, amount, timing, and uncertainty of revenue and cash flows from customer contracts.

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Effective date and transition

IFRS 15 is effective for annual periods beginning on or after 2018-01-01. Entities can apply either a full retrospective approach or a modified retrospective approach, depending on how they want to present transition effects.

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Amendments and status

This page is the current canonical page for IFRS 15. It supersedes earlier revenue guidance such as IAS 18 and contract-construction guidance such as IAS 11.

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Source references