Industry insight for IFRS 15

IFRS 15: Revenue from Contracts with Customers

The International Accounting Standards Board (IASB) has published a new standard, IFRS 15 ‘Revenue from Contracts with Customers’ (’IFRS 15’). IFRS 15 outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts’ and related Interpretations.

Revenue is a vital metric for users of financial statements and is used to assess a company’s financial performance and prospects. IFRS 15 provides substantial enhancements to how revenue is reported.

The core principle of IFRS 15 is that a company recognises revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. IFRS 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively and improve guidance for multiple-element arrangements.

IFRS 15 is effective for reporting periods beginning on or after 1 January 2017, with earlier application being permitted. In order to apply IFRS 15, some entities may need to change their systems and processes in line with the requirements coming out of the new Standard.

To understand the key aspects of this standard, you can download the Deloitte Global May 28, 2014 issue of IFRS in Focus.