IFRS 15 :

Revenue from Contracts

with Customer
TABLE OF CONTENT

 Overview & effective date

 The objective of IFRS 15
 Scope and exemption
 The five-step model
 Other aspects of the model
 Disclosures

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1 Overview and effective date

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Overview

Issued Replaces
On One model for
Existing all revenue
May 28, IFRS & arising from
2014 contracts with
US GAAP
customers

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 Effective Date
IFRS
Effective for annual periods beginning on or after 1 January 2018. In
Indonesia on or after 1 January 2020.
Effective date
US GAAP
Public entities : On or after 15 December 2017
Non-public entities: Have an optional one-year deferral.

IFRS
Permitted

Early adoption
US GAAP
Prohibited*
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2 The Objective of IFRS 15

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What is the objective of IFRS 15?

IFRS 15 sets the principles to apply when reporting about:

The Nature The Amount The Timing The Uncertainty

of revenue and cash flows from a contract with a customer.

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3 Scope and Exemptions

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What is in scope and not in scope?
Sale of some
Contracts
In Scope: with
non-
financial
customers
assets

!
Financial Instruments &
Not In Leases
Other rights & Obligation
Scope:
Insurance
Non-monetary exchanges
Contracts

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4 The Five-step Model

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The Five-step Model
Step 1 Step 3 Step 5
Determine
Identify the Recognize
the
contract with revenue when
Transaction
a customer (or as) an entity
Price (TP)
satisfies a PO
Step 2 Step 4
Identify the
PO in the Allocate the
Contract TP to the PO
in the contract

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Step 1: Identify the contract with a customer

A contract is an agreement between 2 parties that creates

enforceable rights and obligations (IFRS 15, Appendix A).

A contract exists only if all the following 5 criteria are met:

The contract has approved & committed to perform Rights identifiable

Payment terms identifiable Has Commercial Substance Collect the consideration

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Contract Combination

Combined if any of the following conditions are met:

Contract Modification

Negotiated as a Consideration in Single performance

package one contract obligation

Contract Modification

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Step 2: Identify the performance obligations (PO) in the contract

A performance obligation is a promise to transfer to a customer

either:

Series of distinct goods/services that are

Good/service (or bundle)
substantially the same and have the same
that is distinct
pattern to transfer

A performance obligation can be both explicit and implicit.

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Step 3: Determine the Transaction Price (TP)

Transaction price reflects the effect of the following:

Variable Non-cash Consideration paid

Significant financing or payable to a
consideration component consideration
(including application of customer
the constraint)

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Step 4: Allocate the TP to the PO in the contract

Transaction price generally allocated based on relative stand-alone selling

prices, but there are 2 exceptions when you allocate in a different way:

Discounts Variable
Consideration

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How to Determine Stand-alone Selling Price?

Observable price Best evidence

If not
available

Estimated price

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Step 5: Recognize revenue when (or as) an entity satisfies a PO

Based on when a promised good or service is transferred to a customer.

How can a performance obligation be satisfied?

Over time At the point of time

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5 Other Aspects of The Model

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 Other Aspects of The Model

Contract Costs

Licenses

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Contract Costs

Cost to obtain a contract

Costs to fulfill a contract

Capitalized costs are amortized

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Licenses

 First determine the licenses

For a distinct license, assess the nature of the promise

Right to access the IP Right to use the IP

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6 Disclosures

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Disclosures

To enable users of financial statements to

Key Principle: understand the nature, amount, timing and
uncertainty of revenue and cash flows arising
from contracts with customers.

Present both qualitative and quantitative information about:

• Contracts with customers
• Significant judgements and changes in judgements made when applying the
standard to those contracts
• Assets recognised from costs to obtain or fulfil a contract
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LET’S REVIEW THE CONTENT

Effective Date

The Objective of IFRS 15

Scope & Exemption

The Five-step Model

Other aspects of the model

Disclosures

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CONCLUSION

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Thanks!
ANY QUESTIONS?

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