IFRS 15 Revenue from Contracts with Customers—Training costs to fulfil a contract (Agenda Paper 2)

Date recorded:


The Committee received a submission asking about whether the training costs incurred by a supplier in relation to revenue contracts meet the asset recognition criteria in IFRS 15:95. Based on the terms of the contract, the supplier is able to recharge the cost of training from the customer, but the training is not a performance obligation of the contract.

Staff analysis

The staff analyse that the training costs are within the scope of IAS 38 based on the examples listed out in IAS 38:5 and IAS 38:69(b) and therefore IFRS 15:95 does not apply. Based on the recognition criteria in IAS 38, the training costs must be expensed as incurred since the employees are not resources controlled by the entity.

The staff further analyse the outcome if an entity were to apply the asset recognition criteria in IFRS 15:95. They conclude that the training costs could not meet the asset recognition criteria based on the definition in the Conceptual Framework.

Staff recommendation

The staff do not recommend adding the matter to the Committee's standard-setting agenda but to instead publish a tentative agenda decision.  


Most Committee members agreed with the staff analysis and conclusion. Some Committee members found that IFRS 15 and IAS 38 would deliver the same result and some agreed that an entity cannot control the employees. However, Committee members pointed out that IAS 38:67 (which states that training costs are an example of an item that is not eligible for capitalisation) is a rather rule-based paragraph included in the principle-based IAS 38 standard. They were concerned with the fact that if the training costs are within the scope of IAS 38, IFRS 15:95 would not apply. They acknowledged that IAS 38:67 refers to internal training costs of the entity and agreed that those are within the scope of IAS 38. However, they would not rule out the possibility of applying the requirements in IFRS 15:95 to account for the training costs that are incurred for the purpose of delivering the services to the customer (i.e. cost of fulfilling the performance obligations).

Some Committee members disagreed with the staff analysis that the training costs should be within the scope of IAS 38. IAS 38:15 gives some explanation on what training costs represent. Therefore, an entity should understand the nature of the costs incurred, for example whether they are incurred to create the workforce or to reinforce the workforce. The staff agreed that judgement is needed to understand the specific facts and circumstances in order to decide whether the costs are within the scope of IAS 38. The Chair suggested to specify in the tentative agenda decision that training costs are those to which IAS 38:15 applies.

Assuming the costs are not within the scope of IAS 38, and on the assumption that the entity has the unconditional right to charge them back to the customer, a financial asset within the scope of IFRS 9 may be recognised if the requirements in IFRS 15:95 are applied. Some Committee members thought that this fact pattern may not be common.

The Committee decided, by a majority of votes, not to add the matter to its standard-setting agenda and to instead publish a tentative agenda decision. The staff will make amendments to the proposed tentative agenda decision based on Committee member comments made in the meeting.


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