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IFRIC 15 — Meaning of continuous transfer

Date recorded:

The Interpretations Committee received two submissions requesting clarification of the notion of continuous transfer of a good in IFRIC 15 Agreements for the Construction of Real Estate. The staff prepared an analysis by comparing the typical terms of agreements for the construction of multi-unit apartment blocks in two contrasting jurisdictions with the criteria for continuous transfer in IFRIC 15 (based on a comparison of the transfer of risks and rewards and control of the work in progress in the two jurisdictions as construction progresses). The staff noted that the clarification of when transfer takes place continuously and when it takes place at a single time in the revised revenue proposals may help resolve the IFRIC 15 issue. The Committee referred this issue to the Board for direction as to the appropriate course of action to take to address this matter.

At the March 2012 meeting, the Board considered several alternatives:

  • Option A – retain IFRIC 15 as issued
  • Option B – revise IFRIC 15 to include the Board’s tentative decisions about continuous transfer, which were included in the revenue exposure draft
  • Option C – revise IFRIC 15 to include indicators of the transfer of control and risks and rewards for use in interpreting IAS 18;
  • Option D – withdraw IFRIC 15

Several Board members noted that the staff analysis was based on a very specific fact pattern and if the facts and circumstances changed, it might lead to a different conclusion.

The Board tentatively decided to direct the Committee to retain IFRIC 15 as issued but to add an explicit statement that the Board understands that it requires considerable work but different answers may come out depending on circumstances.