IFRS Accounting Decisions |

Contract costs

IFRS 15 for contract costs specifies the accounting treatment for costs an entity incurs to obtain and fulfil a contract to provide goods or services to customers as discussed below. An entity only applies these requirements to costs incurred that relate to a contract with a customer that is within the scope of IFRS 15.

When an entity recognises capitalised contract costs under IFRS 15, any such assets must be presented separately from contract assets and contract liabilities in the statement of financial position or disclosed separately in the notes to the financial statements (assuming they are material).Contract costs

Furthermore, entities must consider the requirements in IAS 1 on classification of current assets when determining whether their contract cost assets are … Read more

No alternative use enforceable payment right

No alternative use enforceable payment right for work to date is the last phase in the satisfaction of performance obligations in IFRS 15 Revenue recognition. This is part of a primary and fundamental subject in the recognition of revenue. There are two ways of recognising revenue, revenue recognition over time and revenue recognition at a point in time. Revenue recognition over time is often referred to as the ‘Percentage of completion‘ method under the (superseded) IAS 11 Construction contracts.

Revenue recognition at a point in time

The general principle is the revenue is recognised at a point in time (and as such it is the most common type of sales transaction at least in volume, just … Read more

IFRS 15 Create or enhance an asset

IFRS 15 Create or enhance an asset is the second phase for IFRS 15 Revenue recognition. This is part of a primary and fundamental subject in the recognition of revenue. There are two ways of recognising revenue, revenue recognition over time and revenue recognition at a point in time. Revenue recognition over time is often referred to as the ‘Percentage of completion‘ method under the (superseded) IAS 11 Construction contracts. IFRS 15 Create or enhance an asset

The general principle is the revenue is recognised at a point in time (and as such it is the most common type of sales transaction at least in volume, just think of: a retailer sells a candy bar for … Read more

Distinct goods or services

Distinct goods or services – Why do we need to know?

Cambridge dictionary definition: Distinct means clearly noticeable – that clearly exists, and an adjective at the same definition that is very useful to IFRS 15:  clearly separate and different (from something else). Distinct goods or services

So a first clarification is: Distinct goods or services = Goods or services that are clearly separate and different from each other.

Variations

Some variations resulting from this: Distinct goods or services

Good(s) clearly separate and different from (an)other good(s), Good(s) clearly separate and different from a service, Service(s) clearly separate and different from (an)other service(s). Distinct goods or services


So now we are up to the more IFRS-ish language on how Read more

Royalty income intellectual property

IFRS 15 Royalty income intellectual property provides application guidance on the recognition of revenue for sales-based or usage-based royalties on licences of intellectual property, which differs from the requirements that apply to other revenue from licences.

IFRS 15 B63 requires that royalties received in exchange for licences of intellectual property are recognised at the later of when:Royalty income intellectual property

(a) The subsequent sale or usage occurs.

and

(b) The performance obligation to which some or all of the sales-based or usage-based royalty has been allocated is satisfied (or partially satisfied).

Royalties revenue recognition

That is, an entity recognises the royalties as revenue for such arrangements when (or as) the customer’s subsequent sales or usage occurs, unless that pattern of recognition accelerates … Read more

IFRS 15 Revenue recognition

IFRS 15 Revenue recognition is a primary and fundamental subject in the recognition of revenue. There are two ways of recognising revenue, revenue recognition over time and revenue recognition at a point in time. Revenue recognition over time is often referred to as the ‘Percentage of completion‘ method under the (superseded) IAS 11 Construction contracts.

The general principle is the revenue is recognised at a point in time (and as such it is the most common type of sales transaction at least in volume, just think of: a retailer sells a candy bar for cash in the shopping mall). As a result there are three criterion (see below ability, direct the use and obtain benefits from) that … Read more