Revenue Recognition

Date recorded:

Presentation of contracts with customers

The Board reaffirmed its preliminary view expressed in the discussion paper that the unit of account is the remaining rights and obligations in the contract with the customer and the contract position is presented net in the statement of financial position. The Board also made a tentative decision that no exceptions be made to this principle. There was some discussion on the latter point as Board members sought to clarify that this accounting applied before the entity recognised a receivable from the customer (it did).

The Board also decided that, where material, net contract assets should be presented separately from net contract liabilities; short-term contract assets should be presented separately from long-term contract assets; and short-term contract liabilities should be presented separately from long-term contract liabilities. Prompted by a Board member, the staff agreed that the general offsetting rules applied: that an entity had to satisfy the offsetting rules in IFRSs before it could offset a contract asset and a contract liability.

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