IFRS 15 – Revenue from Contracts with Customers
The single global model that governs when — and how much — revenue a company is allowed to recognize.
How revenue moves from contract to income statement
Identify the contract Agreement
There must be an agreement between two parties that creates enforceable rights and obligations — with clear payment terms and a real chance that payment will actually be collected.
Identify the performance obligations Unbundle
Contracts often bundle several promises together — a product plus installation plus a warranty, for example. Each distinct promise is separated out and treated as its own obligation.
Determine the transaction price Measure
This is the total amount a company expects to receive in exchange for delivering the goods or services — including discounts, bonuses, penalties, or variable amounts.
Allocate the transaction price Split
Where a contract has more than one performance obligation, the price is divided between them based on what each part would sell for on its own.
Recognize revenue Record
Revenue is recorded either at a single point in time — such as delivery — or gradually over time, such as during an ongoing service contract, depending on when control actually transfers to the customer.
The Core Principle
Revenue is recognized when control of a good or service passes to the customer — not simply when cash changes hands or an invoice is raised.
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