Part of the main section Recognition – Performance obligations satisfied over time
Examples 13–17 illustrate the requirements in paragraphs 35–37 and B2–B13 of IFRS 15 on performance obligations satisfied over time. In addition, the following requirements are illustrated in these examples paragraphs 35(a) and B3–B4 of IFRS 15 on when a customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs (Examples 13–14).
Example 13—Customer simultaneously receives and consumes the benefits
IE67 An entity enters into a contract to provide monthly payroll processing services to a customer for one year.
IE68 The promised payroll processing services are accounted for as a single performance obligation in accordance with paragraph 22(b) of IFRS 15. The performance obligation is satisfied over time in accordance with paragraph 35(a) of IFRS 15 because the customer simultaneously receives and consumes the benefits of the entity’s performance in processing each payroll transaction as and when each transaction is processed. The fact that another entity would not need to re-perform payroll processing services for the service that the entity has provided to date also demonstrates that the customer simultaneously receives and consumes the benefits of the entity’s performance as the entity performs. (The entity disregards any practical limitations on transferring the remaining performance obligation, including setup activities that would need to be undertaken by another entity.) The entity recognises revenue over time by measuring its progress towards complete satisfaction of that performance obligation in accordance with paragraphs 39–45 and B14–B19 of IFRS 15.
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