IFRS 15

Question 1

Before revenue can be recorded the following need to be determined:

Answer 1

• a contract
• with a customer

Question 2

Define what a customer is:

Answer 2

• A party that contracts with an entity to obtain goods and services.
• The entity provides those goods and services in the ordinary course of business.
• in exchange for compensation (fixed fee or payment).

Question 3

An agreement can be defined as a contract when the following requirements are met:

Answer 3

• There is an agreement between 2 or more parties.
• The agreement creates rights and obligations which are enforceable.
• The contract has commercial substance.
• It is probable that the entity will receive the considerations from the party .

Question 4

Define a performance obligation:

Answer 4

A performance obligation is defined in IFRS 15 par 22 as:
- a distinct good or service (or bundle thereof); OR
- A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

Question 5

Define when goods are distinct:

Answer 5

In par 27 the following two criteria need to be met:
- The good or service is capable of being distinct.
- The good or service must be distinct in the context of the contract. Separately identifiable from other promises within the contract.

Question 6

When determining the transaction price, the following need to be considered:

Answer 6

We must consider whether the transaction price:
- includes fixed considerations only or whether it includes variable considerations as well;
- contains a significant financing component;
- includes non-cash consideration; and
- involves consideration payable to the customer.

Question 7

An entity transfers control of a good or service over time when one of the following requirements are met:

Answer 7

• the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.
• the entity’s performance creates or enhances an asset that the customer controls.
• 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.