Amendments to IFRS 15 - Revenue from contracts with customers

09 September 2015

In June 2015’s Business Edge we noted that the International Accounting Standards Board (IASB) were consulting on the possible deferral of the effective date of IFRS 15 by one year to 1 January 2018. In July, the IASB confirmed this one year deferral.

The principle reasons for the deferral is to allow the IASB to consult on some targeted amendments to the standard to support implementation, to allow entities a longer period to comply with the requirements of the standard and to align the effective date with of Topic 606 (the revenue standard issued by FASB).

The IASB has now started its consultation on the targeted amendments which aim to clarify how to:

  • Identify the performance obligations in a contract
  • Determine whether a party involved in a transaction is the principal (responsible for providing the goods or services) or the agent (responsible for arranging for the goods and services to be provided to the customer), and
  • Determine whether a licence provides the customer with a right to access or a right to use the entity’s intellectual property.

In addition, two new transitional provisions are proposed to permit an entity:

  1. To use hindsight in (i) identifying the satisfied and unsatisfied performance obligations in a contract that has been modified before the beginning of the earliest period presented and (ii) in determining the transaction price.
  2. That has elected to use the full retrospective method not to apply IFRS 15 retrospectively to contracts that are completed by the beginning of the earliest period presented.

The IASB is seeking responses on its proposals by 28 October 2015 and expects to complete its discussions by the end of 2015, after which amendments will be issued.

View the Business Edge 2015 index