IFRS 15 - Revenue From Contracts With Customers Flashcards
what is the definition of a customer?
a party that has contracted with the entity to obtain g/s that are the output of the entity’s ordinary activities in exchange for a consideration
what would make a contract in the scope of IFRS 15?
- contract is approved
- rights to something
- payment terms
- commercial substance
- collectability is probable
what do we base probability of collection on?
based on customer’s ability and intention only
when will a contract not exist?
if each party has the unilateral enforceable right to cancel a wholly unperformed contract without compensation
when do we recognize revenue?
when our performance obligation is satisfied and we transfer the good/service
what do we do if the customer pays before the IFRS requirements are met?
we recognize a liability, unless the payment is non-refundable
what can the entity supply in the contract?
- distinct goods and services
- a series of g/s that has the same pattern of transfer
how do we recognize revenue?
to depict the transfer of promised g/s to a customer that reflects the consideration the company expects to be entitled to in exchange for the g/s
what is the performance obligation of the entity?
to transfer g/s
what is the performance obligation of the customer?
to pay the consideration
what is the definition of distinct?
- can benefitted from on its own
- g/s separately identifiable from other contract promises
when would goods not be separately identifiable?
significantly integrated
at what amount do we recognize revenue?
at the transaction price
what can the transaction price include?
- variable consideration
- the existence of a significant financing component
examples of variable consideration?
- discounts
- rebates
- penalties
how does a financing component come about?
when the timing of the payment gives one of the parties a benefit
what will the financing component be if the entity performs early?
trade receivable measured at PV and will be increased by interest income until future payment date
what will the financing component be if the customer performs early
contract liability measured at PV and will be increased by interest expense until future performance date
when is something not a significant financing component?
if less than 12 months
what if there are multiple performance obligations?
we measure them based on their stand-alone selling prices
what time methods can we use when recognizing revenue?
- at a point in time
- over time
when can be recognize revenue over time?
(meet any ONE):
- customer simultaneously receives and consumes all benefits as entity performs
- entity performance creates/enhances an asset controlled by the customer as the asset is created
- entity performance does not create an asset with alternative use to the entity AND entity has enforceable right to pmt for performance completed to date
when can be recognize revenue at a point in time?
if previous requirements not met
what do we need to use to recognize revenue over time?
a measure of progress
