A performance obligation is satisfied by transferring a promised good or service to a customer (IFRS 15.31). Example: A series of distinct goods or services that are substantially the same. Les impacts de la norme, dans son ensemble, pourront être significatifs dans certaines industries, comme les opérateurs téléphoniques ou les SSII. All companies are impacted by the disclosure requirements of IFRS 15, the revenue standard. Enforceability of the rights and obligations in a contract is a matter of law. when the entity keeps the legal title until all receivables are paid by a customer. In other words, the entity is using the goods or services as inputs to produce or deliver the combined output or outputs specified by the customer. IFRS 15.B18 | ASC 606-10-55-20 state: Input methods recognise revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation (for example, resources consumed, labour hours expended, costs incurred, time elapsed or machine hours used) relative to the total expected inputs to the satisfaction of that performance obligation. It is also important that the right to payment is legally enforceable. The setup of manufacturing line is not a distinct service and does not constitute a separate performance obligation as it does not result in a transfer of goods or services to the customer. En échange de ce coût initial et ponctuel, l’entité ne transfère ni un bien ni un service, ce qui ne crée aucune «obligation de performance». The equipment and its installation as treated as a single performance obligation as the customer would not be able to benefit from the equipment or installation service on its own. Paragraphs 28 and 30 have not been amended but have been included for ease of … IE2 Examples 1–4 illustrate the requirements in paragraphs 9–16 of IFRS 15 on identifying the contract. Basis for Conclusions to IFRS 15 and Example 19 include specific discussion on uninstalled materials (IFRS 15.BC170-BC175) and inefficiencies and wasted materials (IFRS 15.BC176-BC178). A manufacturer contracts with its customer for a production of 100,000 pieces of sporting equipment. IFRS 15 Revenue from Contracts with Customers; Basis for Conclusions on IFRS 15 Revenue from Contracts with Customers; Illustrative Examples IFRS 15 Revenue from Contracts with Customers; Effective Date of IFRS 15; Clarifications to IFRS 15 Revenue from Contracts with Customers Similarly, construction companies do not recognise revenue when they deliver building materials to the construction site if the customer contracted them to construct a building. If a performance obligation is satisfied over time, revenue is recognised based on the progress towards complete satisfaction of performance obligation. See Example 11 Cases A/E, Example 12 and Example 56 Case A accompanying IFRS 15. Activities that do not transfer a good or service to a customer are not a performance obligation even though they may be necessary to fulfil a contract (IFRS 15.25). Example – Volume discount incentive This is an adaptation from IFRS 15, Illustrative examples, Example 24. the entity’s performance does not create an asset with an alternative use to the entity due to legal and/or practical restrictions and. 41 . Découvrez toutes nos offres d'abonnement et accédez à nos articles et dossiers en ligne. [IFRS 15:50] Variable consideration can arise, for example, as a result of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or other similar items. For example, a gym membership is an obligation to stand-ready to provide the customer with access to the gym and its equipment. In the May 2018 edition of Accounting Alert we discussed the five step model for revenue recognition introduced by IFRS 15 Revenue from Contracts with Customers (“IFRS 15”):. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset, or to restrict the access of other entities to those benefits (IFRS 15.31-34). Sometimes a customer can benefit from the good or service only by using them with other readily available resources (e.g. For contracts that require an acceptance by a customer of the good or service in question, the entity does not consider a performance obligation to be satisfied until such acceptance is obtained. The standard was published in May 2014 and is effective from 1 January 2018. Performance obligation is satisfied over time if one of the criteria given in IFRS 15.35 is met: This criterion is met in routine or recurring services, such as access to the Internet charged on a flat fee basis or cleaning services, but can also apply in more complex contracts. When the entity is unable to measure the progress reliably, revenue is recognised only to the extent of the costs incurred, provided that the entity expects to recover them. Consequently, an entity would disregard any contractual limitations that might preclude the customer from obtaining readily available resources from a source other than the entity. Such a bundle is then treated as a single performance obligation (IFRS 15.30). Connection fee is not a distinct service and does not constitute a separate performance obligation as it does not result in a transfer of goods or services to the customer. The fact that the customer is obliged to pay for the work performed to date is a crucial indicator that the customer controls the asset and performance obligation is satisfied over time. L’entité conclut que l’option de renouvellement n’est pas un droit particulier dont le client pourrait se prévaloir en dehors du contrat. Executive summary 3 2. For example, if the fare was £30 and the commission is £3, under IFRS 15 the £3 pound will be accounted as turnover ad the £27 posted to cost of … with a dealer or distributor) covered in IFRS 15.B77-B78, bill-and-hold arrangements covered in IFRS 15.B79-B82 and in Example 63 accompanying IFRS 15. The definition of control can be split into the following parts as set out in IFRS 15.33 and discussed further by the IASB in IFRS 15.BC120: The assessment of when control has been transferred to a customer should be made from his perspective (IFRS 15.BC121). 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