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Revenue IFRS15 - Coggle Diagram
Revenue IFRS15
IFRS 15
only applies to contracts that are between the entity and customer
A customer has been defined as "A party that has
contracted
with an entity
to obtain goods and services
that are an
output
of an entity's
ordinary activities
in exchange for consideration"
The new
5 step model
3.)
Determine the transaction price
4.) Allocate the transaction price to the performance obligation
2.)
Identify the performance obligations in the contract
5.)
Recognise Revenue as/when each performance obligation is satisfied
1.)
Identify the contract with the customer
Step1: Identifying the contract with a customer
A contract is accounted for if the following 5 criteria is met
3.)
Payment terms and conditions
for G & S to be transferred can be
identified
4.)
Contract has
commercial substance
Receive additional cash flows as a result of the contract
Risk that the customer will default
2.)
Each parties
rights
in relation to the goods and services to be transferred can be
identified
5.)
It is probable that the entity will
collect the consideration
to which the entity is entitled to
customer intention and ability to pay
1.)
The parties to the contract
have approved
the contract(in writing or etc.) and are
committed to perform
their respective obligations
Step 2: Identify the performance obligation in the contract
First identify the promises
IFRS 15 applies an
allocated transaction price model
At
contract inception
the entity
assess
the goods and services in the contract so as to
identify
the individual
Performance obligation
that the entity has committed to transfer to the customer
The entity identifies each performance obligation that is
A good/service that is distinct
A service of distinct Goods and Services that are
substantially the same
have the same pattern of transfer to the customer
considers not only those goods and service defined in the contract
(Implicit)
Also looks at customary business policies
(Explicit)
entity creates valid expectations from customers
Determination of
distinct
A good or service is distinct if:
(a).
The customer can benefit from the Good/service on its own or together with other readily available resources
(b).
The entity's promise to transfer the Goods or service
separately identifiable
from other promises in the contract
If an entity regularly sells goods/services separetly
This is evidence that the customer can
benefit
from that Good/Services
on its own or together
with other
readily available resources