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IASB proposes clarifications to IFRS 15

  • IASB document Image

Jul 30, 2015

The IASB has published an exposure draft (ED), “Clarifications to IFRS 15.” Comments on the ED are due by October 28, 2015.


On May 28, 2014, the IASB issued IFRS 15, Revenue From Contracts With Customers, which is sub­stan­tially the same as the FASB’s counterpart standard, Accounting Standards Update (ASU) No. 2014-09. After issuing the new revenue standard, the IASB and FASB formed the joint revenue transition resource group (TRG) to support the im­ple­men­ta­tion of the new standard. The boards have resolved most of the issues discussed by the TRG without needing to perform additional stan­dard set­ting. However, the boards concluded that they needed to further consider five topics (iden­ti­fy­ing per­for­mance oblig­a­tions, principal-versus-agent con­sid­er­a­tions, licensing, col­lec­tibil­ity, and measuring noncash con­sid­er­a­tion). In addition, some stake­hold­ers asked for practical ex­pe­di­ents.

Suggested changes

The ED would make targeted amendments to three of the topics (iden­ti­fy­ing per­for­mance oblig­a­tions, principal-versus-agent con­sid­er­a­tions, and licensing) and would provide tran­si­tion relief for modified contracts and completed contracts. The IASB decided that it was not necessary to propose amendments related to col­lec­tibil­ity or measuring noncash con­sid­er­a­tion.

Iden­ti­fy­ing per­for­mance oblig­a­tions

IFRS 15 requires an entity to identify per­for­mance oblig­a­tions on the basis of distinct promised goods or services. To clarify the concept of “distinct,” the IASB is proposing amendments to the il­lus­tra­tive examples in IFRS 15.

Principal-versus-agent con­sid­er­a­tions

Under IFRS 15, when another party is involved in providing goods or services to a customer, an entity must determine whether it is the principal in the trans­ac­tion or the agent on the basis of whether it controls the goods or services before they are trans­ferred to the customer. To clarify how to assess control, the IASB is proposing to amend and extend the ap­pli­ca­tion guidance on this issue, to amend some of the existing examples, and to add two examples.


When an entity grants a license to a customer that is distinct from other promised goods or services, the entity must determine whether the license is trans­ferred at a point in time or over time on the basis of whether the contract requires the entity to undertake ac­tiv­i­ties that sig­nif­i­cantly affect the in­tel­lec­tual property to which the customer has rights. To clarify when an entity’s ac­tiv­i­ties sig­nif­i­cantly affect the in­tel­lec­tual property, the IASB is proposing to amend and extend the ap­pli­ca­tion guidance, as well as some examples, related to this issue. In addition, the IASB is proposing to extend the guidance on applying the royalty con­straint.

Tran­si­tion relief

The IASB is proposing the addition of two transition-related practical ex­pe­di­ents to IFRS 15.

  • An entity may use hindsight in (1) iden­ti­fy­ing the satisfied and un­sat­is­fied per­for­mance oblig­a­tions in a contract that has been modified before the beginning of the earliest period presented and (2) de­ter­min­ing the trans­ac­tion price.
  • An entity electing to use the full ret­ro­spec­tive method does not have to apply IFRS 15 ret­ro­spec­tively to completed contracts at the beginning of the earliest period presented.

Request for feedback

In the ED, the IASB asks whether con­stituents agree that it does not need to amend IFRS 15’s provisions related to col­lec­tibil­ity, measuring noncash con­sid­er­a­tion, and a practical expedient for presenting sales taxes.

Al­ter­na­tive view

One Board member voted against the pub­li­ca­tion of the ED. This Board member supported all proposed clar­i­fi­ca­tions and the ad­di­tional tran­si­tion relief but disagreed with the proposal to require an entity to apply the amend­ments ret­ro­spec­tively.


The FASB has decided to propose more extensive amend­ments to its revenue standard. In May 2015, the FASB issued a proposed ASU on (1) iden­ti­fy­ing per­for­mance oblig­a­tions and (2) licensing. A second proposed ASU that would clarify the guidance on principal-versus-agent con­sid­er­a­tions, col­lec­tibil­ity, measuring noncash con­sid­er­a­tion, and practical ex­pe­di­ents related to tran­si­tion and the pre­sen­ta­tion of sales taxes is expected to be released later in 2015. The Basis for Con­clu­sions of the IASB’s ED discusses aspects of the guidance for which outcomes may differ as a result of the boards’ different decisions.

Next steps

The IASB expects to complete its re­de­lib­er­a­tions by the end of 2015. The ED does not include a proposed effective date, but the IASB’s objective is to finalize the proposed amend­ments in suf­fi­cient time to set an effective date that aligns with the revised effective date of IFRS 15.

Additional information

For more information, see the ED and press release on the IASB’s Web site as well as the IAS Plus project page on clar­i­fi­ca­tions to IFRS 15.

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