SNAPSHOT OF IFRS 15 – REVENUE FROM CONTRACTS

Effective from 1 January 2018 so…In use 30 June 2018 & 31 December 2018

BUT REMEMBER…..Comparatives will include 2017.

IFRS 15 replaces;IT

  • IAS 18 Revenue,
  • IAS 11 Construction Contracts
  • SIC 31 Revenue – Barter Transaction Involving Advertising Services
  • IFRIC 13 Customer Loyalty Programs
  • IFRIC 15 Agreements for the Construction of Real Estate and
  • IFRIC 18 Transfer of Assets from Custome

IFRS i

IFRS 15 vs IFRS 18

Biggest impact is where there is bundled goods and / or services

-       Eg : Digicel and Bluesky

-       Software development

Revenue must now be allocated when each “performance obligation” is satisfied rather than when “invoiced”

Performance Obligation – any good or service that is to be provided to the customer

Must identify “DISTINCT” performance obligations (ie those that can be separately identified)

PRINCIPLES OF REPORTING

  • The Nature
  • The amount
  • The timing and
  • The uncertainty

Of revenue and cashflows from contract with customers

APPLICATION of IFRS 15

-       ONLY applied if there is CONTRACT AND CUSTOMER (not supplier, banker etc)

EXEMPTION:

Does not applied to

-       Leases – IFRS 16

-       Financial intruments (IFRS 9)

-       Insurance

5 STEPS APPROACH

  1. Identify the contract with the customer (Approval, right, terms, commercial substance, customer ability to pay)
  2. Identify the “performance obligations’ in the contract – distinct performance obligation
  3. Determine the “Transaction price” -
  4. Allocate the transaction price to the performance obligations in the contract
  5. Recognise Revenue when performance obligation is satisfied

Source: SIA TRAINING IFRS 2017.