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IFRS 15: REVENUE PART 2 - Coggle Diagram
IFRS 15: REVENUE PART 2
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Contract costs
Costs to fulfil a contract
Recognise as an asset if meet all of the following:
:check: Costs relate directly to a contract or an anticipated contract, which entity can specifically identiy
:check: Costs generate or enhance resources of the entity, which will be used in satisfying future performance obligations
:check: Costs are expected to be recovered
Costs of obtaining a contract
Incremental costs of obtaining a contract are recognised as an asset if the entity expects to recover them.
Amortisation and impairment of costs recognised as an asset
:black_small_square: Amortisation to SOPL on a systematic basis
:black_small_square: Costs of obtaining a contract (if amortisation period is ≤ 1 year) :arrow_right: recognise as expense when incurred
Impairment loss recognised in SOPL if carrying amount exceeds:
:black_small_square: Remaining amount of consideration entity expects to receive in exchange for the goods/services relates to asset
:black_small_square: Costs directly related to providing goods/services, which have not yet been recognised as expenses
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Warranties
If customer does not have the option to purchase a warranty separately, account for the warranty accordance to IAS 37 Provision, Contingent Liabilities and Contingent Assets
If a warranty provides the customer with a service in addition, the promised service is a performance obligation
If customer has the option to purchase a warranty separately, treat as separate performance obligation
Principal versus agent
If the entity arranges for goods or services to be provided by the other party, it is an agent
Revenue :point_right: fee or commision
If the entity controls the specified goods or services before transfer to a customer, it is a principal
Revenue :point_right: gross amount of consideration
Indicators that an entity controls the goods/services
:check: Entity is primarily responsible for fulfilling the promise to provide the specified goods/services
:check: Entity has inventory risk
:check: Entity has option in establishing the price for the specified goods/services
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