Rs 15 Objective A ‘The objective of IFRS 15 isto establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. (IFRS 1 Application of the standard is mandatory for annual reporting periods starting from 1 January 2018 ‘onwards. Earler application is permitted. Effective January 1, 2038 (earlier application is permitted), IFRS (PRS) 25 wil replace the following standards and interpretations: PAS 18 Revenue, PAS 11 Construction Contracts SIC 31 Revenue - Barter Transactions Involving Advertisers Services PFRIC 13 Customer Loyalty Programs FRIC 15 Agreements for the Construction of Real Estate and ERIC 18 Transfer of Assets from Customers eeooee ‘The core principle of IFRS (PFRS) 15 Is that an entity wil recognize revenue to depict the transfer of, promised goods or services, to customers in an amount that reflects the consideration (payment) to ‘hich the entity expects to be entitled in exchange for those goods or services. ‘The Five-Step Process for Revenue Recognition under IFRS (PFRS) 15 are as follows: Step 1: Identify the contract with customers. There should be an agreement between two or ‘more parties that creates enforceable rights or obligations. It can be: written, oral, oF implied from customary business practice. Step 2: Identify the separate performance obligations in the contract. A performance ‘obligation isa promise in a contract with a customer to transfer a good or service to the customer. Step 3: Determine the transaction price. Transaction price Is the amount of consideration that a company expects to receive from a customer in exchange for transferring {g00d or service. Step 4: Allocate the transaction price to the separate performance obligations. For 3 contract that has more than one performance obligation, an entity should allocate the transaction price to each performance obligation in an amount the depicts the amount of consideration to which the entity expects to be entitled in exchange for, satisfying each performance obligation. Step $: Recognize revenue when performance obligation Is satisfied. ‘Accounting Procedures > Revenue cannot be recognized until a contract exists > Company obtains rights to receive consideration and assumes obligations to transfer goods cor services > Rights and performance obligations gives rise to an (net) asset or (net) lability > Company does not recognize contract assets or liabilities until one or both parties to the ‘contract perform. Contract asset = Right received > Performance Obligation Contract liability = Rights received < Performance Obligation vy Scope IFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for: > leases within the scope of IAS 17 Leases;