Interswitch - CONFIDENTIAL

CASE STUDY – FINANCE TRACK

Software Subscription with Customization and Variable Consideration

Company ABC is a multinational software company that provides a cloud-based software platform for
enterprise clients. The company offers a subscription-based model where clients pay monthly fees for
access to the software platform. Additionally, clients may request customization services to tailor the
software to their specific needs.

Key Details:

1) Subscription Agreement: Company ABC enters into a three-year subscription agreement with
Client XYZ to provide access to its software platform. The agreement includes monthly
subscription fees of $10,000 per month.
2) Customization Services: Client XYZ requests customization services to integrate the software
platform with its existing systems. The customization work is estimated to take six months and will
incur additional costs of $50,000.
3) Variable Consideration: The subscription agreement includes a performance-based pricing
mechanism where the monthly subscription fee may vary based on the client's usage metrics.
Company ABC estimates a 20% probability of achieving performance targets that would trigger a
10% increase in the subscription fee.
4) Revenue Recognition: Company ABC follows the guidance of IFRS 15 for revenue recognition.

Assignment Tasks:

1) Analyze the subscription agreement between Company ABC and Client XYZ to identify the
performance obligations, transaction price components, and allocation considerations.
2) Determine the appropriate accounting treatment for revenue recognition under IFRS 15,
considering the subscription fees, customization services, and variable consideration.
3) Discuss the disclosure requirements under IFRS 15 and identify the information that should be
included in Company ABC's financial statements.

Kindly deliver your analysis using a PowerPoint presentation, with no more than 5 slides