Ifrs

Philippines | Technical Research | 17 July 2014 (Issue 4)

Accounting & Auditing News

IFRS 15 — Revenue from Contracts

with Customers: Part 2B – Differences

vs. IAS 18 — Revenue

Type of Revenue Impacted

Under IAS 18, Revenue (IAS 18.1-6)

This Standard shall be applied in accounting for revenue arising from the following transactions and events:

(IAS 18.1)

a) the sale of goods;

b) the rendering of services; and

c) the use by others of entity assets yielding interest, royalties and dividends.

Under IFRS 15, Revenue from Contracts with Customers (IFRS 15.5-8, IN7 )

An entity shall apply this Standard to all contracts with customers, except the following: (IFRS 15.5)

a) lease contracts within the scope of IAS 17 Leases;

b) insurance contracts within the scope of IFRS 4 Insurance Contracts;

c) 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; and

d) non-monetary exchanges between entities in the same line of business to facilitate sales to

customers or potential customers. For example, this Standard would not apply to a contract

between two oil companies that agree to an exchange of oil to fulfil demand from their

customers in different specified locations on a timely basis.

The core principle of IFRS 15 is that an entity recognizes 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. An entity recognizes revenue in accordance with that core

principle by applying the following steps: (IFRS 15.IN7 )

a. Step 1: Identify the contract(s) with a customer—a contract is an agreement

between two or more parties that creates enforceable rights and obligations. The...