The revenue reporting standard IFRS 15 spells big changes for some entities and industries. Find out how it affects you

In Brief

  • IFRS 15 took effect for periods starting on or after 1 January 2018
  • It replaced several standards, establishing a single standard for all entities in all industries
  • The standard may have had little effect on some entities but required significant changes for others


IFRS 15 Revenue from Contracts with Customers is a comprehensive framework for determining when and how much revenue to recognise. IFRS 15 replaces both IAS 11 and IAS 18 as well as SIC 31, IFRIC 13, IFRIC 15 and IFRIC 18.


The core principle [of IFRS 15] is that a company should recognise revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. International Accounting Standards Board (IASB).


IFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for:

  • Leases within the scope of IAS 17 Leases;
  • financial instruments and other contractual rights or obligations within the scope of IFRS 9 Financial Instruments, 
  • IFRS 10 Consolidated Financial Statements, 
  • IFRS 11 Joint Arrangements, 
  • IAS 27 Separate Financial Statements and 
  • IAS 28 Investments in Associates and Joint Ventures;
  • insurance contracts within the scope of IFRS 4 Insurance Contracts; and non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers.

Key terms defined by IFRS 15

Contract – An agreement between two or more parties that creates enforceable rights and obligations.

Customer – A party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.

Income – Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in an increase in equity, other than those relating to contributions from equity participants.

Performance obligation – A promise in a contract with a customer to transfer to the customer either:

a) A good or service (or a bundle of goods or services) that is distinct; or

b) A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

Revenue – Income arising in the course of an entity’s ordinary activities. Transaction price (for a contract with a customer) – The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Five-Step model

IFRS 15 provides a principles-based five-step model applicable to all contracts with customers. The entity will recognise revenue to depict 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.

  • Step 1: Identify contract(s) with customer
  • Step 2: Identify performance obligations in the contract(s)
  • Step 3: Determine the transaction price
  • Step 4: Allocate the transaction price
  • Step 5: Recognise revenue when the performance obligation is satisfied

Contract costs

To be recognised as an asset, the incremental cost of obtaining a contract needs to fulfil conditions as per the IFRS 15. These are recognised as an asset if all of the following criteria are met:

  • Costs are directly linked to contract
  • Costs will generate resources which will then help satisfying performance obligations
  • Costs will be recovered


The standard requires sufficient qualitative and quantitative disclosures to enable users of financial statements to understand entity’s contract with a customer(s), the significant judgement used or change in judgement and if any assets recognised from the costs to obtain or fulfil a contract with a customer(s). 

Key dates

IFRS 15 was issued in May 2014 and applicable to the annual reporting period beginning on or after 1 January 2018.

CA ANZ CPD activity on IFRS Revenue Recognition

Members can access e-learning based paid courses

New Zealand membersAustralian members