Advanced Financial Reporting: Revenue Recognition

Front 1

IFRS 15: Revenue recognition

Back 1

5 step approach

Front 2

Step 1

Back 2

Identify the contract with the customer

-Commercial substance and it is probable that the company will collect the consideration

Front 3

Step 2

Back 3

Identify the performance obligations in the contract

-Promises to transfer distinct goods or services

-Customer can benefit separately

Front 4

Step 3

Back 4

Determine the transaction price

-Expected amount of the consideration

-Penalties

-Discounts

-Customers right to return goods

-Time value of money

Front 5

Step 4

Back 5

Allocate the transaction price to the performance obligation

Front 6

Step 5

Back 6

Recognise revenue when a performance obligation is satisfied-At a point in time if there is an indicator of when control changes hands-Over time if the customer recieves benefits as the entity performs or the entity creates or enhances the customer's asset