IFRS 15: Overview of the new principles of revenue recognition
Given the volume of innovations and clarifications introduced by IFRS 15, it is important to identify its impact as early as possible, both to prepare for the transition and to anticipate the accounting consequences on future contracts or contracts currently under negotiation.
In May 2014, the IASB published IFRS 15, Revenue from Contracts with Customers. Simultaneously, the FASB published ASU 2014-09 (Topic 606). These two broadly identical texts represent the culmination of the Boards’ work on a major joint project that has taken many years to complete.
A recognition model in 5 steps:
Step 1 : Identify the contract(s) with a customer
Step 2 : Identify the performance obligations (POs) in the contract
Step 3 : Determine the transaction price (TP)
Step 4 : Allocate the TP to the POs in the contract
Step 5 : Recognize revenue when (or as) the entity satisfies a PO