2.3.2.
2 IFRS 15 ‘Revenue from Contracts with Customers’
Effective July 1, 2018, the Branch has applied IFRS 15 “Revenue from
Contracts with Customers” for determining its revenue recognition policy.
IFRS 15 replaces IAS 18 “Revenue” and IAS 11 “Construction Contracts” and
related interpretations. IFRS 15 addresses revenue recognition for contracts
with customers as well as treatment of incremental costs incurred in
IFRS 15 establishes a single comprehensive model for entities to use in
accounting for revenue arising from contracts with customers. Specifically,
the standard introduces a 5 - step approach to revenue recognition:
Step 1 Identify the contract with a customer
Step 2 Identify the performance obligations in the contract
Step 3 Determine the transaction price
Step 4 Allocate the transaction price to the performance obligations in the contract
Step 5 Recognise revenue when (or as) the entity satisfies a performance obligation
IFRS 15 introduces a single five-step model for revenue recognition and
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
Under IFRS 15, an entity recognises revenue when (or as) a performance
obligation is satisfied, i.e. when ‘control’ of the goods or services underlying
the particular performance obligation is transferred to the customer.
Preciously revenue was recognised when the outcome of a construction
contract could be estimated reliably, by reference to the stage of completion
of the contract activity at the end of the reporting period. Reliable estimation
of the outcome requires reliable estimates of the stage of completion, future
costs and collectability of billings.
in the contract
ance obligation
