IFRS in practice 2018
22 February 2018
IFRS 15 Revenue from Contracts with Customers
On 28 May 2014, the International Accounting Standards Board (IASB) published IFRS 15 Revenue from Contracts with Customers. IFRS 15 sets out a single and comprehensive framework for revenue recognition and, for many entities, the timing and profile of revenue recognition will change. In some areas, the changes will be very significant and will require careful planning.
Previous IFRS guidance is set out in two relatively old standards (IAS 18 Revenue and IAS 11 Construction Contracts) which are accompanied by a number of Interpretations. In common with other more recently issued IFRSs, IFRS 15 includes comprehensive application guidance and illustrative examples, together with a detailed section which sets out how the IASB reached its decisions about the new requirements (the Basis for Conclusions).
The new standard also introduces an overall disclosure objective together with significantly enhanced disclosure requirements for revenue recognition. These are accompanied by an explicit statement that immaterial information does not need to be disclosed and that the disclosure requirements should not be used as a checklist. In practice, even if the timing and profile of revenue recognition does not change, it is possible that new and/or modified processes will be needed in order to obtain the necessary information.
In this publication, we update our previous guidance to discuss issues that companies have encountered in implementing IFRS 15 and include a number of new examples to deomstrate how the standard should be applied.
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