Dela Cruz, Nathaniel Jr. B.

Reflection Paper
ACTG 23 – A

The business industry is constantly changing. With the advent of technology and application
of new ideas brought about by past experiences, businesses across different industries adapt with
these changes. Since we are talking about scales of economies, it is the job of an accountant to
measure these figures in order to help in economic decision making. This is where application of
standards plays its roles. The Philippines Financial Reporting Standards which govern the accounting
standards in the Philippines promulgated a new standard in lieu of PAS 18 (Revenue) which is the
PFRS 15 – Revenue from Contracts with Customers.

Through the seminar conducted by Sir Rainiel Soriano, I somewhat had a grasp of what IFRS
15 is all about. There are steps on recognizing revenue according to the standards which are as
follows: Identify the contract, Identify the separate performance obligation, determine the
transaction price, allocate transaction price to the separate obligation performance and recognize
revenue when each performance of obligation is satisfied. According to our seminar, IFRS 15
supersedes the following standards: IAS 11 (Construction Contracts), IAS 18 (Revenue), IFRIC 13
(Customer Loyalty Programs), IFRIC 15 (Agreements for the Construction of Real Estate), IFRIC 18
(Transfer of Assets from Customer), and SIC 31 (Revenue – Barter Transactions involving Advertising
Services).

In the first step of the standard, there are criteria which needs to be met in order for the
revenue to be recognized. These criteria are as follows: the contract must be approved and the
contacting parties are committed to it; rights and payment terms are identifiable; has commercial
substance; and the consideration is probable of collection. If the contract does not meet the criteria
mentioned above, no revenue shall be recognized. Instead, any consideration received is recognized
as liability. In identifying the performance obligations in the contract, each promise in a contract to
transfer a distinct good or service is treated as a separate performance obligation. In the third step,
when the consideration includes a variable amount, the entity shall estimate the amount to which it
is entitled by using either the expected value or the most likely amount methods. The fourth step
discusses that the transaction price shall be allocated to the performance obligations based on the
relative stand-alone selling prices of those goods or services. The last step of the standard explains
that revenue must be recognized when for a performance obligation satisfied at a point in time or as
for a performance obligation satisfied over time the entity satisfies a performance obligation.

Although the concepts in this standard is too complex to grasp right away, with continuous
reading and solving problems, we can learn this eventually. I realized that this standard is
complicated compared to existing standards. As students, it our role to understand this since we will
eventually apply this in the corporate world, especially if we will choose to work in the public
accounting sector. More than learning the concept of IFRS 15, I am elated as well for learning
different tips on how to study and prepare for the board exam. As an aspiring CPA, we must
incessantly hone our knowledge in accounting in order to pass and even ace the board exam. We are
hoping for more seminars and engagements such as this one to gain acquire more accounting
knowledge which will be useful in our endeavors as future accountants.