Item 5
20%
Item 1
20%
PFRS 15 (Revenue from Contracts with Customers)
Item 4 Item 2
The objective of PFRS 15 is to establish the principles that an entity
20% 20%
shall apply to report useful information to users of financial
Item 3
20% statements about the nature, amount, timing, and uncertainty of
revenue and cash flows arising from a contract with a customer.
Scope
PFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for: leases
within the scope of PAS 17 Leases; financial instruments and other contractual rights or obligations within
the scope of PFRS 9 Financial Instruments, PFRS 10 Consolidated Financial Statements, PFRS 11 Joint
Arrangements, PAS 27 Separate Financial Statements and PAS 28 Investments in Associates and Joint
Ventures; insurance contracts within the scope of PFRS 4 Insurance Contracts; and non-monetary exchanges
between entities in the same line of business to facilitate sales to customers or potential customers.
Step 3: Determine the transaction price
The five-step model framework The transaction price is the amount to
which an entity expects to be entitled in
Step 1: Identify the contract with the customer exchange for the transfer of goods and
A contract with a customer will be within the scope of services. When making this
IFRS 15 if all the following conditions are met: determination, an entity will consider
the contract has been approved by the parties to the contract; past customary business practices.
each party’s rights in relation to the goods or services to be transferred can Step 4: Allocate the transaction price to the
be identified; performance obligations in the contracts
the payment terms for the goods or services to be transferred can be Where a contract has multiple performance obligations,
identified; an entity will allocate the transaction price to the
the contract has commercial substance; performance obligations in the contract by reference to
and it is probable that the consideration to which the entity is entitled to in their relative standalone selling prices.
exchange for the goods or services will be collected. Step 5: Recognise revenue when (or as) the
Step 2: Identify the performance obligations in the contract entity satisfies a performance obligation
At the inception of the contract, the entity should assess the Revenue is recognised as control is passed, either over
goods or services that have been promised to the customer, and time or at a point in time.
identify as a performance obligation: Contract costs
a good or service (or bundle of goods or services) that is the costs relate directly to a contract (or a specific
distinct; or a anticipated contract);
series of distinct goods or services that are substantially the the costs generate or enhance resources of the
same and that have the same pattern of transfer to the entity that will be used in satisfying performance
customer. obligations in the future;
and the costs are expected to be recovered.
Presentation in financial statements Disclosures
The disclosure objective stated in IFRS 15 is for an entity to disclose
Contracts with customers will be presented in an entity’s sufficient information to enable users of financial statements to
statement of financial position as a contract liability, a contract understand the nature, amount, timing and uncertainty of revenue
asset, or a receivable, depending on the relationship between and cash flows arising from contracts with customers. Therefore, an
the entity’s performance and the customer’s payment. entity should disclose qualitative and quantitative information about
all of the following:
A contract liability is presented in the statement of financial its contracts with customers;
position where a customer has paid an amount of the significant judgments, and changes in the judgments, made in
consideration prior to the entity performing by transferring the applying the guidance to those contracts; and
related good or service to the customer. any assets recognised from the costs to obtain or fulfil a contract with
a customer.
SOURCE: DELOITTE.
PETER JUSTIN A. MASONGSONG ACCOUNTING FOR SPECIAL TRANSACTIONS
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