For those entities preparing general purpose financial reports, appropriate consideration needs to be made for the interpretation and application of AASB 15 (IFRS 15) – Accounting Revenue from Contracts with Customers.
AASB 15 (IFRS 15) establishes a comprehensive framework for recognition of revenue from contracts with customers based on a core principle that an entity should recognise revenue representing 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.
- How does the entity identify satisfaction/completion of performance obligations?
- Is it more appropriate to use an input method or output method to measure delivery of performance obligations, if applicable?
- How to include/measure amounts of variable consideration included in revenue (i.e. bonuses for achievement of a specific milestone).
- Recognising when there is a Significant Financing Component in your contract AASB 15 (IFRS 15) has specific requirements when it comes to a “significant financing component”.
- How to include or measure non-cash consideration included in the calculation of revenue (i.e. if the contract specified that the customer supplies plant or equipment)