IFRS 15 - Revenue Recognition Standard - Changes and Challenges

Learning Objectives

• To discuss the basic elements of IFRS 15.
• To explain 5 Step model of revenue recognition.
• To analyze the practical challenges faced by the organizations in implementing the standard.
• To discuss guidelines on how we can implement the standard.
• To analyze disclosure requirements in IFRS 15.

Course Description

The objective of IFRS 15 is to 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 15 is aimed to bring consistency in reporting across industries and ensure relevant information is available to users making the decision.

The core principle of IFRS 15 is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

This core principle is delivered in a five-step model:

• Identify the contract(s) with a customer
• Identify the performance obligations in the contract
• Determine the transaction price
• Allocate the transaction price to the performance obligations in the contract
• Recognize revenue when (or as) the entity satisfies a performance obligation

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Overview

• Identify the contract with the customer

  12 mins
• What typically happens now?

  18 mins
• Identify the contract with the customer

  31 mins
• Identify the separate performance obligations

  46 mins
• Determine the transaction price

  65 mins
• Example of transaction price

  73 mins
• Revenue over time vs. At the point of time

  105 mins
• Presentation and disclosure

  123 mins