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IFRS 15 — Revenue from Contracts with Customers

Effective date:

Effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted.

Published by the IASB:

May 2014

Included in Part I of CPA Canada Handbook:

February 2015

Reach out to our IFRS 15 Specialist

Maryse Vendette

Overview

IFRS 15, Revenue from Contracts with Customers, is a new standard that outlines a single comprehensive framework for entities to use in accounting for revenue arising from contracts with customers. It supersedes current revenue recognition guidance including IAS 18 Revenue and IAS 11 Construction Contracts and related Interpretations.

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.

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.


IFRS 15 also includes a cohesive set of disclosure requirements that significantly expands the current disclosure requirements related to revenue recognition.

History of IFRS 15

The following table shows the history of this standard subsequent to the adoption of IFRS in Canada.

Date1

Development

Comments

Included in Part I of the CPA Canada Handbook2

May 28, 2014

IFRS 15, Revenue from Contracts with Customers issued

 

This new standard establishes a comprehensive framework for the recognition, measurement and disclosure of revenue. The core principle in that framework is that an entity should recognize revenue to depict the transfer of promised goods and 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.

The new standard is effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted.

February 2015

September 11, 2015

One-year deferral of the effective date of IFRS 15

The amendment defers the effective date of IFRS 15 by one year to annual periods beginning on or after January 1, 2018. Earlier application is permitted.

January 2016

April 12, 2016

Final amendments to IFRS 15

The amendments do not change the underlying principles of the Standard, but rather clarify how the principles should be applied.

The amendments clarify how to: (i) identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; (ii) determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and (iii) determine whether the revenue from granting a licence should be recognized at a point in time or over time.

The amendments also include additional transitional relief provisions aimed at reducing the cost and complexity for entities when they first apply the new Standard.

The amendments are effective for annual reporting periods beginning on or after January 1, 2018. Earlier application is permitted.

August 2016

June 1, 2017

Issue of non-authoritative material in respect of IFRS 15 to the CPA Canada Handbook

The Basis for Conclusions and Illustrative Examples issued by the IASB in May 2014 that accompany, but are not part of, IFRS 15, Revenue from Contracts with Customers, have been added to the June 2017 CPA Canada Handbook. Both documents exclude amendments made subsequently by the IASB for Effective Date of IFRS 15, and Clarifications to IFRS 15 Revenue from Contracts with Customers.

 

 Notes

  1. For further details of relevant developments prior to this, please refer to our Deloitte Global section.
  2. Newly issued, amended or revised IFRSs are part of Canadian GAAP only after they are approved by the Accounting Standards Board in accordance with its due process.
The above summary does not include details of consequential amendments made as the result of other projects.

Related Interpretations

  • None

Related IFRIC Agenda Rejection Notices

  • None

AcSB’s IFRS Discussion Group meetings

  • June 21, 2018 - IFRS 15: Sale of Non-financial Assets Involving Royalty Interest and Capitalization of Financing Costs
  • January 10, 2018 - IFRS 15: Changes in Transaction Price and Scope Interactions
  • October 5, 2017 - IFRS 15: Significant Financing Component
  • October 5, 2017 - IFRS 9, IFRS 15 and IAS 34: Disclosing the Effects of Adopting New Standards
  • May 30, 2017 - IFRS 15: Purchase Returns and IFRS 9, IFRS 15 and IAS 16: Seller’s Right to Variable Consideration in an Asset Sale
  • November 29, 2016 - IFRS 15: Guidance on Transition Resource Group and Update on Implementation Support
  • September 13, 2016 - IFRS 15: Guidance from the Transition Resource Group
  • May 31, 2016 - IFRS 15: Revenue from Contracts with Customers
  • December 3, 2015 - IFRS 15 and IAS 18: Bill-and-hold Arrangements
  • September 10, 2015 - IFRS 15: Revenue from Contracts with Customers
  • May 14, 2015 - IFRS 15: Transition and IFRS 15: Revenue from Contracts with Customers
  • December 9, 2014 - IFRS 15: Revenue from Contracts with Customers
  • September 11, 2014 - IFRS 3, IFRS 15, IAS 18 and IAS 37: Contingent Consideration in an Asset Sale and IFRS 15: Revenue from Contracts with Customers 

Amendments under consideration

  • None

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