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Applying IFRS

Presentation and disclosure requirements of IFRS 15July 2017

1 July 2017 Applying IFRS Presentation and disclosure requirements of IFRS 15

Contents

1. Introduction and disclosure objective 3

2. What is changing from current IFRS? 5

3. Presentation within the primary financial statements 7

3.1 Revenue from contracts with customers 7

3.2 Contract balances 8

3.3 Assets recognised from the costs to obtain or fulfil a contract 10

3.4 Assets and liabilities arising from rights of return 10

3.5 Significant financing components 11

4. Disclosures within the notes to the financial statements 12

4.1 Disaggregation of revenue 12

4.2 Contract balances 16

4.3 Performance obligations 21

4.4 Significant judgements 27

4.5 Assets recognised from the costs to obtain or fulfil a contract 31

4.6 Practical expedients 32

5. Disclosures in interim financial statements 34

6. Transition disclosures 35

6.1 Disclosures under the full retrospective approach 35

6.2 Disclosures under the modified retrospective approach 40

6.3 Disclosures in interim financial statements in the year ofadoption 44

Appendix A: Extract from EY’s IFRS Disclosure Checklist 45

July 2017 Applying IFRS Presentation and disclosure requirements of IFRS 15 2

What you need to know • IFRS 15 is effective for annual reporting periods beginning on or after

1 January 2018.

• With only a few months left to implement the standard, entities may wish

to make planning for the new presentation and disclosure requirements

a priority.

• Entities may need to change aspects of their financial statement

presentation and significantly expand the volume of their disclosures

when they adopt the new revenue recognition standard issued by the

IASB, even if they do not expect adoption of the standard to affect the

timing or measurement of revenue.

• Entities will likely need to adjust their processes, controls and systems to

capture the necessary data to meet the new presentation and disclosure

requirements.


1. Introduction and disclosure objectiveIn May 2014, the International Accounting Standards Board (IASB) and the USFinancial Accounting Standards Board (FASB) (collectively, the Boards) issuedlargely converged new revenue standards that will supersede virtually allrevenue recognition requirements in IFRS and US GAAP, respectively.1 Thestandards provide accounting requirements that will apply to all revenue arisingfrom contracts with customers (unless the contracts are in the scope of otherIFRSs or US GAAP requirements, such as the leasing standards). The standardsalso specify the accounting for costs an entity incurs to obtain and fulfil acontract to provide goods and services to customers and provide a model forthe measurement and recognition of gains and losses on the sale of certain non-financial assets, such as property, plant or equipment.2

In response to criticism that existing revenue recognition disclosures wereinadequate, the Boards also sought to create a comprehensive and coherent setof disclosures. The new disclosure requirements will affect all entities, even thosethat may have concluded there will be little change to the timing and amount ofrevenue they will recognise under the new standards. This aspect of the newstandards may present a significant challenge both on transition and on anongoing basis.

The objective of the disclosure requirements in the new standards is to provide“sufficient information to enable users of financial statements to understandthe nature, amount, timing and uncertainty of revenue and cash flows arisingfrom contracts with customers.” To achieve that objective, entities are requiredto provide disclosures about its contracts with customers, the significantjudgements and changes in those judgements, used in applying the standardsand assets arising from costs to obtain and fulfil its contracts.3

While an entity must provide sufficient information to meet the objective,the disclosures described in the standards are not intended to be a checklist ofminimum requirements. That is, entities do not need to include disclosures thatare not relevant or are not material to them. In addition, an entity does not needto disclose information in accordance with the revenue standards if it disclosesthat information in accordance with another standard.

Entities are required to consider the level of detail necessary to satisfy thedisclosure objective and the degree of emphasis to place on each of the variousrequirements. The level of aggregation or disaggregation of disclosures willrequire judgement. Furthermore, entities are required to ensure that usefulinformation is not obscured (by either the inclusion of a large amount ofinsignificant detail or the aggregation of items that have substantially differentcharacteristics).

1 IFRS 15 Revenue from Contracts with Customers and Accounting Standards Codification(ASC) 606, Revenue from Contracts with Customers (created by Accounting Standards Update(ASU) 2014-09) (together with IFRS 15, the standards). Throughout this publication, when werefer to the FASB’s standard, we mean ASC 606 and the related cost guidance codified inASC 340-40 (including all the recent amendments), unless otherwise noted.

2 Refer to our publication, Applying IFRS: The new revenue standard affects more than justrevenue (February 2015), available on ey.com/IFRS.

3 IFRS 15.110.


How we see itEntities should review their disclosures to determine whether they have metthe standards’ disclosure objective to enable users to understand the nature,amount, timing and uncertainty of revenue and cash flows arising fromcontracts with customers. For example, some entities may make largepayments to customers that do not represent payment for a distinct goodor service and therefore reduce the transaction price and affect the amountand timing of revenue recognised. Although there are no specificrequirements in the standards to disclose balances related to considerationpaid or payable to a customer, an entity may need to disclose qualitativeand/or quantitative information about those arrangements to meet theobjective of the disclosure requirements if the amounts are material.

This publication provides a summary of the new presentation and disclosurerequirements in the IASB’s standard, IFRS 15 Revenue from Contracts withCustomers, both at transition and on an ongoing basis. It also illustrates possibleformats entities could use to disclose information required by IFRS 15 using real-life examples from entities that have early adopted IFRS 15 or the FASB’s newrevenue standard and/or illustrative examples. This publication does not coverdisclosures required by IAS 8 Accounting Policies, Changes in AccountingEstimates and Errors prior to adoption.

Extracts from financial reports presented in this publication are reproduced forillustrative purposes. They have not been subject to any review on compliancewith IFRS or US GAAP or any other requirements, such as local capital marketrules. This publication documents possible practices that entities havedeveloped and the extracts presented here are not intended to represent ’bestpractice’. We also remind readers that the extracts presented should be read inconjunction with the rest of the information provided in the financial statementsin order to understand their intended purpose.

This publication supplements our Applying IFRS, A closer look at the new revenuerecognition standard4 (general publication) and should be read in conjunctionwith it.

The views we express in this publication may evolve as implementation continuesand additional issues are identified. The conclusions we describe in ourillustrations are also subject to change as views evolve. Conclusions in seeminglysimilar situations may differ from those reached in the illustrations due todifferences in the underlying facts and circumstances. Please see ey.com/IFRSfor our most recent revenue publications.

4 The most up-to-date version of this publication is available at www.ey.com/IFRS.


2. What is changing from current IFRS?IFRS 15 provides explicit presentation and disclosure requirements that aremore detailed than under current IFRS (i.e., IAS 11 Construction Contracts,IAS 18 Revenue and related Interpretations) and increase the volume ofrequired disclosures that entities will have to include in their interim and annualfinancial statements. Many of the new requirements involve information thatentities do not currently disclose.

In practice, the nature and extent of changes to an entity’s financial statementswill depend on a number of factors, including, but not limited to, the nature ofits revenue-generating activities and level of information it currently discloses.Nevertheless, the following table summarises, at a high level, the types ofchanges that many entities could expect when they adopt IFRS 15. This tabledoes not provide an exhaustive list.

IFRS 15 requirements Current disclosures Potential changes

Disaggregated revenue(IFRS 15.114 – 115)

Revenue by segmentand by significantcategory in accordancewith IFRS 8 OperatingSegments

• Furtherdisaggregationwithin segments

• Disaggregation bymultiple categories

Contract balances(IFRS 15.116 – 118)

Potential ManagementDiscussion & Analysis(MD&A) discussion ofsignificant work inprogress and deferredrevenue

• Additionalquantitativerequirements forcontract balances

• More prescriptiverequirements fornarrative discussion

• Applies to allcontract balances

Performanceobligations(IFRS 15.119 – 120)

Potential MD&Adiscussion of ‘backlog’

• Disclosures for allunsatisfiedperformanceobligations at thereporting date(when not applyingthe practicalexpedient)

• Only includesamounts included inthe transactionprice

Significant judgements(IFRS 15.123 – 126)

General requirementsfor disclosures ofsources of estimationuncertaintyin accordance withIAS 1.125

• New narrative andquantitativedisclosures aboutjudgements usedwhen determiningtiming andmeasurement ofrevenue recognition


IFRS 15 requirements Current disclosures Potential changes

Assets recognised fromthe costs to obtain orfulfil a contract(IFRS 15.127 – 128)

No currentrequirements

• New narrative andquantitativedisclosures aboutthe balances andamortisation(includingimpairment losses)of contract costsassets

Accounting policydisclosures(IAS 1.117)

Requirement todisclose significantaccounting policies

• No change torequirement, butentities will need toreassess theiraccounting policydisclosures.

As part of their adoption of IFRS 15, entities will also need to reassess theiraccounting policy disclosures.5 Under current IFRS, entities provide briefand, sometimes, boilerplate disclosures of the policies in respect of revenuerecognition. The brevity may be due, in part, to the limited nature of theguidance provided in current revenue recognition requirements. Giventhe complexity of the requirements in IFRS 15, the policies that apply torevenues and costs within the scope of the standard will also be morechallenging to explain and require entities to provide more tailored anddetailed disclosures.

How we see itIFRS 15 significantly increases the volume of disclosures required in entities’financial statements, particularly annual financial statements. In addition,many of the required disclosures are completely new.

We believe entities may need to expend additional effort when initiallypreparing the required disclosures for their interim and annual financialstatements. For example, entities operating in multiple segments with manydifferent product lines may find it challenging to gather the data needed toprovide the disclosures. As a result, entities will need to ensure that theyhave the appropriate systems, internal controls, policies and proceduresin place to collect and disclose the required information. In light of theexpanded disclosure requirements and the potential need for new systemsto capture the data needed for these disclosures, entities may wish toprioritise this portion of their implementation efforts.

5 IAS 1.117.


3. Presentation within the primary financialstatements3.1 Revenue from contracts with customersEntities are required to present in the statement of comprehensive income, ordisclose in the notes, the amount of revenue recognised from contracts withcustomers separately from other sources of revenue.6 Refer to section 4.1 fordiscussion on the requirement to disclose disaggregated revenue. Refer tosection 10.1 of the general publication for more information on thisrequirement.

In Note 3 of its first quarter (Q1) 2017 financial statements, Ford MotorCompany separately disclosed revenue from sales and services from othersources of revenue that are outside the scope of the revenue standard.

Practical example 3.1a: Ford Motor Company (Q1 2017) USA

Unless required, or permitted, by another standard, IAS 1 Presentation ofFinancial Statements does not permit offsetting of income and expenses withinprofit or loss or the statement of comprehensive income.7

After applying the requirements for determining the transaction price inIFRS 15, revenue recognised by an entity may include offsets, for example, forany trade discounts given and volume rebates paid by the entity to its customer.Similarly, in the ordinary course of business, an entity may undertake othertransactions that do not generate revenue, but are incidental to the mainrevenue-generating activities. When this presentation reflects the substance ofthe transaction or other event, IAS 1 permits an entity to present “the results ofsuch transactions … by netting any income with related expenses arising on thesame transaction”.8 An example given in IAS 1 is presenting gains and losseson the disposal of non-current assets by deducting from the amount ofconsideration on disposal the carrying amount of the asset and related sellingexpenses.9

6 IFRS 15.113(a).7 IAS 1.32.8 IAS 1.34.9 IAS 1.34(a).


3.2 Contract balancesThe standard requires an entity to present the following items separately in thestatement of financial position:10

• Contract asset: An entity’s right to consideration in exchange for goods orservices that the entity has transferred to a customer

• Contract liability: An entity’s obligation to transfer goods or services to acustomer for which the entity has received consideration (or an amount ofconsideration is due) from the customer

• Receivable: An entity’s right to consideration that is unconditional (only thepassage of time is required before payment of that consideration is due).

In its Q1 2017 financial statements, Raytheon Company presents theseamounts separately using the terminology from the standard (see practicalexample 3.2 below). The standard allows an entity to use alternativedescriptions in the statement of financial position. However, an entity mustdisclose sufficient information so that users of the financial statements canclearly distinguish between unconditional rights to receive consideration(receivables) and conditional rights to receive consideration (contract assets).11

In practical example 4.2a (in section 4.2), General Dynamics Corporationillustrates the use of such an approach, using alternative terminology, butexplaining in its revenue note how those terms align with the terms used withinthe revenue standard.

Entities are required to disclose impairment losses from contracts withcustomers separately from other impairment losses, either in the statementof comprehensive income or in the notes.12 Refer to section 10.1 of the generalpublication for further discussion.

Practical example 3.2: Raytheon Company (Q1 2017) USA

…

3.2.1 Current versus non-current presentation

Unless an entity presents its statement of financial position on a liquidity basis,it will need to present assets or liabilities arising from contracts within the scopeof IFRS 15 as current or non-current in the statement of financial position.IFRS 15 does not provide guidance on making this determination. Rather,entities will need consider the requirements in IAS 1.

10 IFRS 15.105-107.11 IFRS 15.109.12 IFRS 15.107, 113(b).


The distinction between current and non-current items depends on the length ofthe entity's operating cycle. IAS 1 states that the operating cycle of an entity isthe time between the acquisition of assets for processing and their realisation incash or cash equivalents. However, when the entity's normal operating cycle isnot clearly identifiable, it is assumed to be 12 months.13 IAS 1 does not provideguidance on how to determine whether an entity's operating cycle is ‘clearlyidentifiable’. For some entities, the time involved in producing goods orproviding services may vary significantly between contracts with one customerto another. In such cases, it may be difficult to determine what the normaloperating cycle is. Therefore, management will need to consider all facts andcircumstances and use judgement to determine whether it is appropriate toconsider that the operating cycle is clearly identifiable, or whether to use thetwelve-month default.

3.2.2 Other presentation considerationsContract assets and liabilities should be determined at the contract level and notat the performance obligation level. As such, an entity would not separatelyrecognise an asset or liability for each performance obligation within a contract,but would aggregate them into a single contract asset or liability.14 Contractasset or contract liability positions are determined for each contract on a netbasis. This is because the rights and obligations in a contract with a customerare interdependent – the right to receive consideration from a customerdepends on the entity’s performance and, similarly, the entity performs only aslong as the customer continues to pay.15

If an entity is required by IFRS 15 to combine contracts with the same customer(or a related party of the customer), the contract assets or liabilities would becombined (i.e., presented net). When two or more contracts are required tobe combined under the standard, the rights and obligations in the individualcontracts are interdependent.16 This may be operationally difficult for entitiesif their systems are designed to capture data at the performance obligationlevel in order to comply with the recognition and measurement aspects ofthe standard.

Since IFRS 15 does not provide requirements for offsetting, entities will needto apply the requirements of other standards (e.g., IAS 1, IAS 32 FinancialInstruments: Presentation) to determine whether it is appropriate to offsetcontract assets and liabilities against other balance sheet items (e.g., accountsreceivable).17

Refer to Questions 10-1, 10-2 and 10-3 in section 10.1 of the generalpublication for further discussion.

13 IAS 1.68, 70.14 TRG Agenda paper no. 7, Presentation of a contract as a contract asset or a contract liability,

dated 31 October 2014.15 IFRS 15.BC317.16 TRG Agenda paper no. 7, Presentation of a contract as a contract asset or a contract liability,

dated 31 October 2014.17 TRG Agenda paper no. 7, Presentation of a contract as a contract asset or a contract liability,

dated 31 October 2014.


3.3 Assets recognised from the costs to obtain or fulfil acontractIf an entity recognises incremental costs of obtaining the contract and/or coststo fulfil a contract as assets in accordance with the requirements in IFRS 15, thestandard requires that such assets are presented separately from contractassets and contract liabilities in the statement of financial position or disclosedseparately in the notes to the financial statements.18

The standard is silent on the classification of contract cost assets. Therefore,entities will need to develop an appropriate accounting policy. In doing so, webelieve that costs to obtain a contract and costs to fulfil a contract need to beconsidered separately for the purpose of presentation in financial statements.

Considering the nature of costs to obtain a contract and the lack of guidance inIFRS, we believe an entity may choose to present these costs as either:

• A separate class of intangible assets in the statement of financial positionand its amortisation in the same line item as amortisation of intangibleassets within the scope of IAS 38 Intangible Assets

Or

• A separate class of asset (similar in nature to work in progress, or‘inventory’) in the statement of financial position and its amortisation withincost of goods sold, changes in contract costs or similar

In contrast, the nature of costs to fulfil a contract is such that they directlyaffect the entity’s performance under the contract. Therefore, costs to fulfila contract should be presented as a separate class of asset in the statement offinancial position and its amortisation within cost of goods sold, changes incontract costs or similar.

Whether costs to fulfil a contract meet the criteria for capitalisation inIFRS 15.95 or are expensed as incurred, we believe that presentation of suchcosts in the statement of profit and loss and other comprehensive income needsto be consistent.

Refer to section 4.5 of this publication for disclosure requirements for suchassets and section 9.3.3 of the general publication for further discussion onpresentation considerations.

3.4 Assets and liabilities arising from rights of returnAn entity may recognise refund liabilities and an asset for the right to recoverproducts on settling that liability. The standard requires an entity to present therefund liability separately from the corresponding asset (on a gross basis, ratherthan a net basis).19

Refer to section 5.4.1 of the general publication for further discussion.

18 IFRS 15.116(a).19 IFRS 15.B25.


3.5 Significant financing componentsWhen a significant financing component exists in a contract, there are twocomponents: a revenue component (for the notional cash sales price); and aloan component (for the effect of the deferred or advance payment terms).20

The amount allocated to the significant financing component is presentedseparately from revenue recognised from contracts with customers. Thefinancing component is presented as interest expense (when the customer paysin advance) or interest income (when the customer pays in arrears).21 The IASBnoted in the Basis for Conclusions that an entity presents interest income asrevenue only when it represents income from an entity’s ordinary activities.22

Impairment losses on receivables, with or without a significant financingcomponent, are presented in line with the requirements of IAS 1 and disclosedin accordance with IFRS 7 Financial Instruments: Disclosures. However, asdiscussed in section 3.2, IFRS 15 makes it clear that such amounts are disclosedseparately from impairment losses from other contracts.23 Refer to 5.5.2 ofthe general publication for further discussion.

How we see itWe believe entities may need to expend additional effort to track impairmentlosses on assets arising from contracts that are within the scope of IFRS 15separately from impairment losses on assets arising from other contracts.Entities will need to ensure that they have the appropriate systems, internalcontrols, policies and procedures in place to collect and separately presentthis information.

20 IFRS 15.BC244.21 IFRS 15.65.22 IFRS 15.BC247.23 IFRS 15.113(b).


4. Disclosures within the notes to the financialstatements4.1 Disaggregation of revenueThe standard includes the following disclosure requirements in relation to thedisaggregation of revenue:

Disclosure requirements IFRS 15

Quantitative • Disaggregated revenue by categoriesthat depict how the nature, amount,timing and uncertainty of revenue andcash flows are affected by economicfactors

IFRS 15.114

• If the entity applies IFRS 8 OperatingSegments, an entity must disclosesufficient information to enable users offinancial statements to understand therelationship between the disclosure ofdisaggregated revenue and revenueinformation that is disclosed for eachreportable segment

IFRS 15.115

While the standard does not specify precisely how revenue should bedisaggregated, the application guidance indicates that the most appropriatecategories for a particular entity will depend on its facts and circumstances.24

When selecting a category to use to disaggregate revenue, entities shouldconsider how revenue is disaggregated for other purposes, including:

• How it discloses revenue in other communications (e.g., press releases,other public filings)

• How information is regularly reviewed by the chief operating decision makerto evaluate the financial performance of operating segments (in accordancewith IFRS 8).

• How other information is used by the entity, or users of the financialstatements, to evaluate financial performance or make resource allocationdecisions

In addition, entities need to make this determination based on entity-specificand/or industry-specific factors that would be most meaningful for theirbusinesses.

24 IFRS 15.B88.


Examples of categories might include, but are not limited to, the following25

(refer to section 10.4.1 of the general publication for further discussion):

Category Example

Type of good or service Major product lines

Geographical region Country or region

Market or type of customer Government and non-governmentcustomers

Contract duration Short-term and long-term contracts

Timing of transfer of goods orservices

Goods or services transferred tocustomers:

• At a point in time

• Over time

Sales channels Goods sold:

• Directly to consumers

• Through intermediaries

IFRS 15 provides the following example to illustrate how an entity might discloseits disaggregated revenue:

Example from IFRS 15

Example 41 — Disaggregation of revenue—quantitative disclosure(IFRS 15.IE210-IE211)

An entity reports the following segments: consumer products, transportationand energy, in accordance with IFRS 8 Operating Segments. When the entityprepares its investor presentations, it disaggregates revenue into primarygeographical markets, major product lines and timing of revenue recognition(ie goods transferred at a point in time or services transferred over time).

The entity determines that the categories used in the investor presentationscan be used to meet the objective of the disaggregation disclosurerequirement in paragraph 114 of IFRS 15, which is to disaggregate revenuefrom contracts with customers into categories that depict how the nature,amount, timing and uncertainty of revenue and cash flows are affected byeconomic factors. The following table illustrates the disaggregation disclosureby primary geographical market, major product line and timing of revenuerecognition, including a reconciliation of how the disaggregated revenue tiesin with the consumer products, transportation and energy segments, inaccordance with paragraph 115 of IFRS 15.

25 IFRS 15.B89.


Example from IFRS 15 (cont’d)

SegmentsConsumer

products Transport Energy TotalCU CU CU CU

Primary geographical marketsNorth America 990 2,250 5,250 8,490Europe 300 750 1,000 2,050Asia 700 260 - 960

1,990 3,260 6,250 11,500

Major goods/service linesOffice Supplies 600 - - 600Appliances 990 - - 990Clothing 400 - - 400Motorcycles - 500 - 500Automobiles - 2,760 - 2,760Solar Panels - - 1,000 1,000Power Plant - - 5,250 5,250

1,990 3,260 6,250 11,500

Timing of revenue recognitionGoodstransferred at apoint in time 1,990 3,260 1,000 6,250Servicestransferred overtime - - 5,250 5,250

1,990 3,260 6,250 11,500

Since entities are encouraged to tailor their disclosure of disaggregated revenue,they are unlikely to follow a single approach.

Consistent with the approach illustrated in the Extract from IFRS 15 above, someearly adopters (including United Health Group Incorporated and RaytheonCompany) provide disaggregated revenue information within their segmentreporting disclosure. General Dynamics Corporation, in its Q1 2017 financialstatements, discloses revenue by major product line, as well as disclosingsegment revenue by contract type and by customer. Raytheon Companydisaggregates revenue in a manner similar to General Dynamics Corporation inits Q1 2017 financial statements and specifically states that this approach isconsistent with the objective of the disclosure requirement.

Practical example 4.1a: Raytheon Company (Q1 2017) USA

Note 14: Business Segment ReportingWe disaggregate our revenue from contracts with customers by geographic location,customer-type and contract-type for each of our segments, as we believe it best depictshow the nature, amount, timing and uncertainty of our revenue and cash flows are affectedby economic factors.


Slater and Gordon Limited includes segment disclosures, but also disclosesdisaggregated revenue by major product line within its segments and type ofcontract in its 2016 annual financial statements:

Practical example 4.1b: Slater and Gordon Limited (2016) Australia

In its 2016 financial statements, Fédération Internationale de FootballAssociation (FIFA) splits its disclosure of disaggregated revenue between theprimary financial statements and the notes. In the statement of comprehensiveincome, FIFA presents revenue on a disaggregated basis, by the type of service.In the notes, FIFA further disaggregates each type of revenue into differentcategories, depending on the nature of the revenue. For example, in Note 1,FIFA disaggregates “Revenue from television broadcasting rights” bygeographical region, while presenting “Revenue from marketing rights” bytype of customer. Since FIFA does not need to comply with IFRS 8, it providesall disaggregation disclosures in accordance with IFRS 15.114 andthe requirements in IFRS 15.115 do not apply.

Practical example 4.1c: Fédération Internationale deFootball Association (FIFA) (2016) Switzerland


Practical example 4.1c: Fédération Internationale deFootball Association (FIFA) (2016) (cont’d) Switzerland

In practical example 6.2b (in section 6.2), Note 2 of Alphabet Inc.’s Q1 2017financial statements provides an example of disclosure of disaggregatedrevenue in a transition year when applying the modified retrospective transitionmethod.

4.2 Contract balancesThe standard includes the following disclosure requirements for an entity’scontract balances and changes in the balances (refer to section 10.4.1 of thegeneral publication for further discussion):


Quantitative • The opening and closing balances ofreceivables, contract assets andcontract liabilities from contracts withcustomers, if not otherwise separatelypresented or disclosed

IFRS 15.116(a)

• Revenue recognised in the reportingperiod that was included in the contractliability balance at the beginning of theperiod

IFRS 15.116(b)

• Revenue recognised in the reportingperiod from performance obligationssatisfied (or partially satisfied) inprevious periods (for example, changesin transaction price)

IFRS 15.116(c)



Qualitative • Explanation how the timing ofsatisfaction of its performanceobligations relates to the typical timingof payment and the effect that thosefactors have on the contract asset andcontract liability balances

IFRS 15.117

Quantitativeor qualitative

• Explanation of the significant changesin the contract asset and the contractliability balances during the reportingperiod, for example:

• Changes due to businesscombinations

• Cumulative catch-up adjustmentsto revenue that affect thecorresponding contract assetor contract liability (includingadjustments arising from a changein the measure of progress, achange in an estimate of thetransaction price) or a contractmodification

• Impairment of a contract asset

• A change in the time frame for aright to consideration to becomeunconditional (i.e., for a contractasset to be reclassified to areceivable)

• A change in the time frame fora performance obligation to besatisfied (i.e., for the recognitionof revenue arising from a contractliability)

IFRS 15.118


How we see itDisclosing contract assets and liabilities and the revenue recognised fromchanges in contract liabilities and performance obligations satisfied inprevious periods will likely be a change in practice for most entities. Inaddition, because IFRS 15.116(a) requires entities to separately disclosecontract balances from contracts with customers, it will be necessary forentities that have material receivables from non-IFRS 15 contracts toseparate these balances for disclosure purposes. For example, an entitymay have accounts receivable related to leasing contracts that would needto be disclosed separately from accounts receivable related to contracts withcustomers.

Entities will need to make sure they have appropriate systems, policies andprocedures and internal controls in place to collect and disclose the requiredinformation. For example, consider a sales-based or usage-based royaltyreceived by the entity in reporting periods after it delivers a right-to-uselicence of intellectual property. In this example, the royalties relate to apreviously satisfied performance obligation, but are revenue that the entityreceives in subsequent periods. As such, they would be disclosed separatelyin accordance with IFRS 15.116(c).

The illustration below is an example of how an entity may fulfil theserequirements by using a combination of tabular and narrative formats:

Illustration 4.2 — Contract asset and liability disclosures

Company A discloses receivables from contracts with customers separately inthe statement of financial position. To comply with the other disclosuresrequirements for contract assets and liabilities, Company A includes thefollowing information in the notes to the financial statements:

20X9 20X8 20X7

Contract asset CU1,500 CU2,250 CU1,800

Contract liability CU(200) CU(850) CU(500)

Revenue recognised in the period from:

Amounts included incontract liability at thebeginning of the period CU650 CU200 CU100

Performance obligationssatisfied in previousperiods CU200 CU125 CU200

We receive payments from customers based on a billing schedule, asestablished in our contracts. Contract asset relates to our conditional right toconsideration for our completed performance under the contract. Accountsreceivable are recognised when the right to consideration becomesunconditional. Contract liability relates to payments received in advance ofperformance under the contract. Contract liabilities are recognised asrevenue as (or when) we perform under the contract. In addition, contractasset decreased in 20X9 due to a contract asset impairment of CU400relating to the early cancellation of a contract with a customer.


Before providing its disclosure of key movements in contract balances, GeneralDynamics Corporation provides a brief explanation of the requirements of thenew revenue standard in respect of its contract balances in practicalexample 4.2a below. It then provides, in note B of its Q1 2017 interim financialstatements, qualitative and quantitative information together (to meet theUS GAAP disclosure requirements that are equivalent to those inIFRS 15.116(b)-118). Opening and closing balances are included in the primaryfinancial statements and in note G.

Practical example 4.2a - General Dynamics Corporation(Q1 2017) USA

B. REVENUE [Extract]

Contract Balances. The timing of revenue recognition, billings and cash collections resultsin billed accounts receivable, unbilled receivables (contract assets), and customer advances anddeposits (contract liabilities) on the Consolidated Balance Sheet. In our defense groups, amountsare billed as work progresses in accordance with agreed-upon contractual terms, either at periodicintervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally,billing occurs subsequent to revenue recognition, resulting in contract assets. However, wesometimes receive advances or deposits from our customers, particularly on our internationalcontracts, before revenue is recognized, resulting in contract liabilities. These assets and liabilitiesare reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of eachreporting period. In our Aerospace group, we generally receive deposits from customers uponcontract execution and upon achievement of contractual milestones. These deposits are liquidatedwhen revenue is recognized. Changes in the contract asset and liability balances during the three-month period ended April 2, 2017, were not materially impacted by any other factors.

Revenue recognized for the three-month periods ended April 2, 2017, and April 3, 2016 ,that was included in the contract liability balance at the beginning of each year was $1.7 billionand $1.4 billion, respectively, and represented primarily revenue from the sale of business-jetaircraft.


Raytheon Company explains, in Note 3 of its Q1 2017 interim report, how thetiming of satisfaction of its performance obligation relates to the typical timingof payment and the effect those factors have on the contract asset and contractliability balances. In Note 6, it discloses the opening and closing balances ofcontract assets and contract liabilities in a separate table. Below the table, itprovides information about revenue recognised that was included in the netcontract assets at the beginning of the period and explains the significantchanges during the reporting period on a qualitative basis.

Practical example 4.2b: Raytheon Company (Q1 2017) USA

…


4.3 Performance obligations4.3.1 Information about performance obligations

IFRS 15 requires an entity to disclose the following qualitative informationabout its performance obligations (refer to section 10.4.1 of the generalpublication for further discussion):

Disclosure requirements IFRS 15Qualitative • Information about performance

obligations in contracts with customer,including a description of the following:

• When the entity typically satisfiesits performance obligations (forexample, upon shipment, upondelivery, as services are renderedor upon completion of service)including when performanceobligationsare satisfied in a bill-and-holdarrangement

IFRS 15.119(a)

• Significant payment terms (forexample, when payment is typicallydue, whether the contract has asignificant financing component,whether the consideration amountis variable and whether theestimateof variable consideration istypically constrained)

IFRS 15.119(b)

• The nature of the goods or servicesthat the entity has promisedto transfer, highlighting anyperformance obligations to arrangefor another party to transfer goodsor services (i.e., if the entity isacting as an agent)

IFRS 15.119(c)

• Obligations for returns, refundsand other similar obligations

IFRS 15.119(d)

• Types of warranties and relatedobligations

IFRS 15.119(e)


In Note 3 of its Q1 2017 interim financial report, Ford Motor Company disclosesinformation about its performance obligation for Vehicles, Parts, andAccessories transaction. It describes when it typically satisfies its performanceobligations (i.e., upon shipment) and the obligation for returns of parts, as wellas the guarantee to cover any price risks for vehicles sold to daily rentalcompanies. It also provides some information about significant estimates whendetermining expected returns or stand-alone selling prices.

Practical example 4.3.1a: Ford Motor Company (Q1 2017) USA

…

As part of its disclosure of information about its performance obligationsrelated to advertising, Alphabet Inc. provides information about its principalversus agent assessment (in the last paragraph in Note 2 of its Q1 2017financial statements), as presented in practical example 4.3.1c below:

Practical example 4.3.1c: Alphabet Inc. (Q1 2017) USA

…


4.3.2 Transaction price allocated to remaining performance obligations

IFRS 15 also requires an entity to provide information about unsatisfied orpartially satisfied performance obligations, as follows (refer to section 10.4.1of the general publication for further discussion):

Disclosure requirements IFRS 15Quantitativeor qualitative

• The aggregate amount of thetransaction price allocated to theperformance obligations that areunsatisfied (or partially unsatisfied)as of the end of the reporting period

IFRS 15.120(a)

• An explanation of when the entityexpects to recognise this amount asrevenue, using either:

• Quantitative information (i.e.,using time bands that would bemost appropriate for the durationof the remaining performanceobligations); or

• Qualitative information

IFRS 15.120(b)

Practicalexpedient

An entity needs not to disclose informationabout the aggregate amount of thetransaction price allocated to theperformance obligations that areunsatisfied, when either of the followingconditions is met:

• The original expected duration of theunderlying contract is one year or less

• The entity recognises revenue fromthe satisfaction of the performanceobligation in accordance withIFRS 15.B16.

That paragraph permits, as a practicalexpedient, that if an entity has a rightto consideration from a customer in anamount that corresponds directly withthe value to the customer of the entity'sperformance completed to date (forexample, a service contract in which anentity bills a fixed amount for each hourof service provided), the entity mayrecognise revenue in the amount towhich the entity has a right to invoice

IFRS 15.121


Disclosure requirements IFRS 15Qualitative • An entity must explain qualitatively

whether it is applying the practicalexpedient in IFRS 15.121 and whetherany consideration from contractswith customers is not included in thetransaction price and, therefore, notincluded in the information disclosedin accordance with IFRS 15.120. Forexample, an estimate of thetransaction price would not include anyestimated amounts of variableconsideration that are constrained

IFRS 15.122

The standard provides the following examples of these required disclosures:

Extract from IFRS 15

Example 42 — Disclosure of the transaction price allocated to theremaining performance obligations (IFRS 15.IE212-IE219)

On 30 June 20X7, an entity enters into three contracts (Contracts A, Band C) with separate customers to provide services. Each contract has a two-year non-cancellable term. The entity considers the requirements inparagraphs 120–122 of IFRS 15 in determining the information in eachcontract to be included in the disclosure of the transaction price allocated tothe remaining performance obligations at 31 December 20X7.

Contract A

Cleaning services are to be provided over the next two years typically atleast once per month. For services provided, the customer pays an hourlyrate of CU25.

Because the entity bills a fixed amount for each hour of service provided,the entity has a right to invoice the customer in the amount that correspondsdirectly with the value of the entity’s performance completed to date inaccordance with paragraph B16 of IFRS 15. Consequently, no disclosure isnecessary if the entity elects to apply the practical expedient inparagraph 121(b) of IFRS 15.

Contract B

Cleaning services and lawn maintenance services are to be provided as andwhen needed with a maximum of four visits per month over the next twoyears. The customer pays a fixed price of CU400 per month for bothservices. The entity measures its progress towards complete satisfaction ofthe performance obligation using a time-based measure.


Extract from IFRS 15 (cont’d)

The entity discloses the amount of the transaction price that has not yetbeen recognised as revenue in a table with quantitative time bands thatillustrates when the entity expects to recognise the amount as revenue. Theinformation for Contract B included in the overall disclosure is as follows:

20X8 20X9 TotalCU CU CU

Revenue expected to be recognised onthis contract as of 31 December 20X7 4,800(a) 2,400(b) 7,200(a) CU4,800 = CU400 × 12 months.(b) CU2,400 = CU400 × 6 months.

Contract C

Cleaning services are to be provided as and when needed over the next twoyears. The customer pays fixed consideration of CU100 per month plusa one-time variable consideration payment ranging from CU0–CU1,000corresponding to a one-time regulatory review and certification of thecustomer’s facility (ie a performance bonus). The entity estimates that itwill be entitled to CU750 of the variable consideration. On the basis of theentity’s assessment of the factors in paragraph 57 of IFRS 15, the entityincludes its estimate of CU750 of variable consideration in the transactionprice because it is highly probable that a significant reversal in the amountof cumulative revenue recognised will not occur. The entity measures itsprogress towards complete satisfaction of the performance obligation usinga time-based measure.

The entity discloses the amount of the transaction price that has not yetbeen recognised as revenue in a table with quantitative time bands thatillustrates when the entity expects to recognise the amount as revenue.The entity also includes a qualitative discussion about any significantvariable consideration that is not included in the disclosure. The informationfor Contract C included in the overall disclosure is as follows:

20X8 20X9 TotalCU CU CU

Revenue expected to be recognised onthis contract as of 31 December 20X7 1,575(a) 788(b) 2,363(a) Transaction price = CU3,150 (CU100 × 24 months + CU750 variable consideration)

recognised evenly over 24 months at CU1,575 per year.(b) CU1,575 ÷ 2 = CU788 (ie for 6 months of the year).

In addition, in accordance with paragraph 122 of IFRS 15, the entitydiscloses qualitatively that part of the performance bonus has been excludedfrom the disclosure because it was not included in the transaction price. Thatpart of the performance bonus was excluded from the transaction price inaccordance with the requirements for constraining estimates of variableconsideration.


The standard also provides an example of how an entity would make thedisclosure required by IFRS 15.120(b) using qualitative information (insteadof quantitatively, using time bands), as follows:

Extract from IFRS 15

Example 43 — Disclosure of the transaction price allocated to theremaining performance obligations—qualitative disclosure(IFRS 15.IE220-IE221)

On 1 January 20X2, an entity enters into a contract with a customer toconstruct a commercial building for fixed consideration of CU10 million. Theconstruction of the building is a single performance obligation that the entitysatisfies over time. As of 31 December 20X2, the entity has recognisedCU3.2 million of revenue. The entity estimates that construction will becompleted in 20X3, but it is possible that the project will be completed inthe first half of 20X4.

At 31 December 20X2, the entity discloses the amount of the transactionprice that has not yet been recognised as revenue in its disclosure of thetransaction price allocated to the remaining performance obligations. Theentity also discloses an explanation of when the entity expects to recognisethat amount as revenue. The explanation can be disclosed either on aquantitative basis using time bands that are most appropriate for the durationof the remaining performance obligation or by providing a qualitativeexplanation. Because the entity is uncertain about the timing of revenuerecognition, the entity discloses this information qualitatively as follows:

‘As of 31 December 20X2, the aggregate amount of the transactionprice allocated to the remaining performance obligation is CU6.8 millionand the entity will recognise this revenue as the building is completed,which is expected to occur over the next 12–18 months.’

In Note 1.1 of its 2016 annual financial statements, European Energy A/Sprovides the disclosure about its unsatisfied performance obligations. Itdiscloses the amount it expects to recognise in 2017 and describes theremaining performance obligations that are expected to be satisfied between2018 and 2036, but without using a tabular format. In this note, it alsodiscloses its use of a transition practical expedient that permits entities, inthe year of adoption, not to provide this information for comparative periods.

Practical example 4.3.2a: European Energy A/S (2016) Denmark


Ford Motor Company also uses a qualitative approach when disclosinginformation about remaining performance obligations. The following extractis from Note 3 of its Q1 2017 financial statements and provides an explanationin relation to its extended service contracts. It also provides information aboutthe recognition of related contract cost assets alongside this disclosure.

Practical example 4.3.2b: Ford Motor Company (Q1 2017) USA

4.4 Significant judgementsThe standard specifically requires disclosure of significant accounting estimatesand judgements made in determining the transaction price, allocatingthe transaction price to performance obligations and determining whenperformance obligations are satisfied.26 These requirements exceed those inthe general requirements for significant judgements and accounting estimatesrequired by IAS 1.27 Refer to section 10.4.2 in the general publication forfurther discussion.

4.4.1 Determining the timing of satisfaction of performance obligations

IFRS 15 requires entities to provide disclosures about the significant judgementsmade in determining the timing of satisfaction of performance obligations. Thedisclosure requirements for performance obligations that are satisfied over timediffer from those satisfied at a point in time, but the objective is similar: todisclose the judgements made in determining the timing of revenue recognition.Entities must disclose the following information:

Disclosure requirements IFRS 15Qualitative For performance obligation satisfied over

time:

• The methods used to recogniserevenue (for example, a description ofthe output methods or input methodsused and how those methods areapplied)

IFRS 15.124(a)

• An explanation of why the methodsused provide a faithful depiction ofthe transfer of goods or services

IFRS 15.124(b)

For performance obligations satisfied at apoint in time, significant judgements madein evaluating when a customer obtainscontrol of promised goods or services

IFRS 15.125

26 IFRS 15.123.27 See IAS 1.122–133.


In Note 2 of its Q1 2017 financial statements (see practical example 4.3.1c (insection 4.3.1), Alphabet Inc. describes the methods used to recognise itsadvertising revenue over time and explains the relationship between themethods and the different types of advertising it provides.

Ford Motor Company recognises revenue at a point in time in relation itsvehicle, parts and accessories sales. Practical example 4.3.1a (in section 4.3.1),includes an extract from Note 3 of its Q1 2017 financial statements, whichprovides a description of when control transfers to the customer for these sales.

Raytheon Company provides qualitative information about the method it uses torecognise revenue over time in Note 3 in its Q1 2017 interim report. It alsodescribes the judgement and complexity involved in the following practicalexample:

Practical example 4.4.1: Raytheon Company (Q1 2017) USA

…


4.4.2 Determining the transaction price and the amounts allocated toperformance obligations

Given the importance placed on revenue by financial statement users, thestandard requires entities to disclose qualitative information about themethods, inputs and assumptions used in their annual financial statements todetermine the transaction price and allocate it, as follows:

Disclosure requirements IFRS 15Qualitative Information about methods, inputs and

assumptions used for the following:

• Determining the transaction price,which includes, but is not limited to:

• Estimating variable consideration

• Considering the effects of timevalue of money

• Measuring fair value of non-cashconsideration

IFRS 15.126(a)

• Assessing whether an estimate ofvariable consideration is constrained

IFRS 15.126(b)

• Allocating the transaction price,including:

• Estimating stand-alone sellingprices of promised goods orservices

• Allocating discounts to a specificpart of the contract (if applicable)

• Allocating variable consideration toa specific part of the contract (ifapplicable)

IFRS 15.126(c)

• Measuring obligations for returns,refunds and other similar obligations

IFRS 15.126(d)

How we see itDisclosing information about the methods, inputs and assumptions they useto determine and allocate the transaction price will be a change in practicefor some entities. Entities with diverse contracts will need to make sure theyhave the processes and procedures in place to capture all of the differentmethods, inputs and assumptions used.


In Note 3 of its Q1 2017 financial statements (see practical example 4.3.1a (insection 4.3.1), Ford Motor Company explains the need to estimate variableconsideration in relation to returns. It also describes how it allocates a portionof the transaction price to warranties that are performance obligations.

Since fee arrangements often include contingencies (e.g., No Win-No Feearrangements), Slater and Gordon Limited estimated variable considerationwhen determining the transaction price as presented in practicalexample 4.4.2a. Therefore, it disclosed information about the method (i.e.,most likely amount approach), inputs and assumptions (i.e., management’sassessment and the probability of success of each case). Furthermore, Slaterand Gordon Limited discloses information about the assessment of whether asignificant financing component exists. The entity concluded that contractsgenerally comprise only one performance obligation. As such, Slater andGordon Limited does not disclose information about the allocation of thetransaction price.

Practical example 4.4.2a: Slater and Gordon Limited(2016) Australia


Raytheon Company provides qualitative information about estimating thetransaction price and estimating stand-alone selling prices when allocating thetransaction price in Note 3 in its Q1 2017 interim report.

Practical example 4.4.2b: Raytheon Company (Q1 2017) USA

…

…

4.5 Assets recognised from the costs to obtain or fulfil acontractIFRS 15 requires entities to disclose information about the assets recognised tohelp users understand the types of costs recognised as assets, and how thoseassets are subsequently amortised or impaired. Refer to section 10.4.3 of thegeneral publication for further discussion. The disclosure requirements are, asfollows:

Disclosure requirements IFRS 15Qualitative • Description of the judgements made in

determining the amount of the costsincurred to obtain or fulfil a contractwith a customer

IFRS 15.127(a)

• The method it uses to determine theamortisation for each reporting period

IFRS 15.127(b)


Disclosure requirements IFRS 15Quantitative • The closing balances of assets

recognised from the costs incurred toobtain or fulfil a contract with acustomer, by main category of asset(for example, costs to obtain contractswith customers, pre-contract costs andsetup costs)

IFRS 15.128(a)

• The amount of amortisation recognisedin the reporting period

IFRS 15.128(b)

• The amount of any impairment lossesrecognised in the reporting period

IFRS 15.128(b)

In practical example 4.3.2b (in section 4.3.2), Ford Motor Company disclosesinformation in relation to the contract cost asset along with information aboutthe related type of revenue contracts.

In the following extract from Note 27 of its 2016 annual financial statements,Rakuten Incorporated discloses information to meet these requirements for itscontract cost assets, using a mixture of tabular and narrative disclosures.

Practical example 4.5: Rakuten Incorporated (2016) Japan

…

…

4.6 Practical expedientsThe standard allows entities to use several practical expedients and requiresthem to disclose their use of the following two practical expedients (refer tosection 10.4.4 of the general publication for further discussion):

Disclosure requirements IFRS 15Qualitative • The fact that an entity elects to use

one of the practical expedients about:

• The existence of a significantfinancing component (IFRS 15.63)

• Incremental costs of obtaining acontract (IFRS 15.94)

IFRS 15.129


In Note E Revenue Recognition in its 2016 financial statements, FIFA disclosesthat it elected to use the practical expedient in IFRS 15.94 relating toincremental costs of obtaining a contract (refer to the second bullet in theextract), along with two practical expedients related to transition. It alsodiscloses its application of IFRS 15.121 in relation to the remainingperformance obligation disclosure requirement (see section 4.3.2).

Practical example 4.6: FIFA (2016) Switzerland


5. Disclosures in interim financial statementsIAS 34 Interim Financial Reporting requires disclosure of disaggregated revenueinformation, consistent with the requirement included in IFRS 15 for annualfinancial statements.28 See section 4.1 for further discussion on this disclosurerequirement and section 6.3 in relation to disclosures in interim periods in theyear of adoption.

Although none of the other annual IFRS 15 disclosure requirements apply tocondensed interim financial statements, entities will need to comply with thegeneral requirements in IAS 34. For example, IAS 34.15 requires an entity toinclude in its interim financial report, sufficient information to explain eventsand transactions that are significant to an understanding of the changes inthe entity’s financial position and performance since the end of the last annualreporting period. Information disclosed in relation to those events andtransactions must update the relevant information presented in the most recentannual financial report. IAS 34.15B includes a non-exhaustive list of events andtransactions for which disclosure would be required if they are significant, andwhich includes recognition of impairment losses on assets arising fromcontracts with customers, or reversals of such impairment losses.

28 IAS 34.16A(l).


6. Transition disclosuresThe following sections outline transition disclosure requirements. Refer tosection 1.3 of the general publication for further discussion on the IFRS 15transition requirements.

In addition to the disclosure requirements discussed in sections 6.1 and 6.2,entities will need to consider the requirement in IAS 1 to provide a thirdstatement of financial position as at the beginning of the preceding period inaddition to the minimum required comparative financial statements.29 IAS 1requires the third statement of financial position be presented if an entity:(a) applies an accounting policy retrospectively, makes a retrospectiverestatement or reclassifies items; and (b) retrospective application, restatementor reclassification has a material effect on the information in the balance sheetat the beginning of the preceding period.

6.1 Disclosures under the full retrospective approachEntities electing to adopt the standard using the full retrospective method willapply the requirements of IFRS 15 to each period presented in the financialstatements, in accordance with IAS 8, subject to certain practical expedients inIFRS 15 created to provide relief. Refer to section 1.3.1 of the generalpublication for further discussion.

Entities applying this approach are required to disclose the followinginformation set out in the table below, but need not repeat it in subsequentperiods. In addition to the disclosure requirements outlined in the table, entitiesthat elect to early adopt IFRS 15 are required to state that fact.

Disclosure requirements IFRS 15Qualitative • The title of the IFRS

• When applicable, that the change inaccounting policy is made inaccordance with its transitionalprovisions

• The nature of the change in accountingpolicy

• When applicable, a description of thetransitional provisions

• When applicable, the transitionalprovisions that might have an effecton future periods

IAS 8.28(a)-(e),(h)

• If retrospective application isimpracticable for a particular priorperiod, or for periods before thosepresented, the circumstances that ledto the existence of that condition anda description of how and from whenthe change in accounting policy hasbeen applied

29 IAS 1.40A.


Disclosure requirements IFRS 15Qualitative • For any of the practical expedients in

IFRS 15.C5 that an entity uses, theentity must disclose all of the followinginformation:

• The expedients that have beenused

• To the extent reasonably possiblea qualitative assessment of theestimated effect of applying eachof those expedients

According to IFRS 15.C5, an entitymay use one or more of the followingpractical expedients when applyingIFRS 15 using the full retrospectivemethod:

a. For completed contracts, an entityneed not restate contracts that: (i)begin and end within the same annualreporting period; or (ii) are completedcontracts at the beginning of theearliest period presented

b. For completed contracts that havevariable consideration, an entity mayuse the transaction price at the datethe contract was completed rather thanestimating variable considerationamounts in the comparative reportingperiods

c. For contracts that were modifiedbefore the beginning of the earliestperiod presented, an entity need notretrospectively restate the contract forthose contract modifications inaccordance with IFRS 15.20-21.Instead, an entity shall reflect theaggregate effect of all of themodifications that occur beforethe beginning of the earliest periodpresented when: (i) identifying thesatisfied and unsatisfied performanceobligations; (ii) determining thetransaction price; and (iii) allocating thetransaction price to the satisfied andunsatisfied performance obligations

d. For all reporting periods presentedbefore the date of initial application, anentity need not disclose the amount ofthe transaction price allocated to theremaining performance obligationsand an explanation of when the entityexpects to recognise that amount asrevenue (see IFRS 15.120)

IFRS 15.C6


Disclosure requirements IFRS 15Quantitative • The amount of the adjustment relating

to periods before those presented, tothe extent practicable

IAS 8.28(g)

Quantitative

Practicalexpedient

• For the current period and each priorperiod presented, to the extentpracticable, the amount of theadjustment:

• for each financial statement lineitem affected

• if IAS 33 Earnings per Shareapplies to the entity, for basic anddiluted earnings per share

Although permitted to do so, an entityneed not present the quantitativeinformation required by IAS 8.28(f) forperiods other than the annual periodimmediately preceding the first annualperiod for which IFRS 15 is applied (the‘immediately preceding period’)

IAS 8.28(f)

IFRS 15.C4

The following practical example provides selected extracts from the 2016annual financial statements for European Energy A/S. European Energy A/Sprovides detailed transition disclosures in note 4.9, disclosing quantitatively theimpact of the change in accounting policy for each line item in comprehensiveincome, its balance sheet and statement of cash flows for comparative periods.Footnoted explanations accompany these disclosures. Furthermore, it disclosesinformation throughout its financial statements about the impact of transitionor cross-references to transition note.

Practical example 6.1: European Energy A/S Denmark

…


Practical example 6.1: European Energy A/S (cont’d) Denmark


Practical example 6.1: European Energy A/S (cont’d) Denmark

…

…


6.2 Disclosures under the modified retrospective approachEntities that elect to adopt the standard using the modified retrospectivemethod will apply IFRS 15 retrospectively to only the most current periodpresented in the financial statements (i.e., the initial period of application). Todo so, the entity will have to recognise the cumulative effect of initially applyingIFRS 15 as an adjustment to the opening balance of retained earnings (or otherappropriate components of equity) at the date of initial application. Under thistransition method, an entity may elect to apply IFRS 15 retrospectively only tocontracts that are not completed contracts at the date of initial application (forexample, 1 January 2018 for an entity with a 31 December year-end). Refer tosection 1.3.2 of the general publication for further discussion.

An entity applying the modified retrospective approach is required to make thedisclosures set out in the table below. In addition to the disclosure requirementsoutlined in the table, entities that elect to early adopt IFRS 15 are required tostate that fact.

Disclosure requirements IFRS 15Quantitative& qualitative

• For reporting periods that include thedate of initial application, an entityshall provide both of the followingadditional disclosures if this Standard isapplied retrospectively in accordancewith paragraph C3(b):

• The amount by which eachfinancial statement line item isaffected inthe current reporting period bythe application of this Standard ascompared to IAS 11, IAS 18 andrelated Interpretations that werein effect before the change

• An explanation of the reasons forsignificant changes identified inC8(a)

IFRS 15.C8


Disclosure requirements IFRS 15Qualitative • If an entity uses the practical expedient

in IFRS 15.C7A, the entity mustdisclose all of the followinginformation:

• The expedient that has been used

• To the extent reasonably possiblea qualitative assessment of theestimated effect of applying theexpedients

According to IFRS 15.C7A, an entityapplying IFRS 15 retrospectively inaccordance with paragraph C3(b)may also use the practical expedientdescribed in paragraph C5(c), either(i) for all contract modifications thatoccur before the beginning of theearliest period presented; or (ii) for allcontract modifications that occur beforethe date of initial application. IFRS15.C5(c) permits, for contracts thatwere modified before the beginning ofthe earliest period presented, an entityto not retrospectively restate thecontract for those contractmodifications in accordance withIFRS 15.20-21. Instead, an entity shallreflect the aggregate effect of all ofthe modifications that occur beforethe beginning of the earliest periodpresented when: (i) identifying thesatisfied and unsatisfied performanceobligations; (ii) determining thetransaction price; and (iii) allocating thetransaction price to the satisfied andunsatisfied performance obligations

IFRS 15.C6,C7A


Ford Motor Company is adopting the FASB’s standard using the modifiedretrospective method. Thus, it provides the amount by which each financialstatement line item is affected in the current reporting period by the applicationof the new standard compared to previous US GAAP revenue guidance. It alsoexplains the reasons for significant changes in practical example 6.2a below:

Practical example 6.2a: Ford Motor Company (Q1 2017) USA


Practical example 6.2a: Ford Motor Company (Q1 2017)(cont’d) USA

In its interim report of Q1 2017, Alphabet Inc. provides disaggregated revenuein accordance with the requirement in the FASB’s standard that is equivalent toIFRS 15.114. However, it does not provide restated prior period informationsince this is not required when applying the modified retrospective method.

Practical example 6.2b: Alphabet Inc. (Q1 2017) USA

…


6.3 Disclosures in interim financial statements in the year ofadoptionIAS 34 requires an entity to disclose changes in accounting policies, includingthe effect on prior years that are included in the condensed interim financialstatements. Furthermore, IAS 34.16A(a) requires that, in the event of a changein accounting policy, an entity discloses “a description of the nature and effectof the change”. In light of these requirements, higher-level transitiondisclosures than those required for annual financial statements in accordancewith IAS 8.29 may be sufficient in condensed interim financial statements.

If an entity prepares more than one set of interim financial statements duringthe year of adoption of IFRS 15 (e.g., quarterly), it should provide informationconsistent with that which was disclosed in its first interim financial report, butupdated for the latest information.

Local regulators may have additional requirements. For example, foreignprivate issuers reporting under IFRS would be required to comply with the SEC’sreporting requirement to provide disclosures prescribed by the new accountingstandard, to the extent not duplicative, in each of its interim financialstatements.30

In addition to these requirements, as discussed in section 5, entities will needto provide disaggregated revenue disclosures in their condensed interimfinancial statements, both in the year of adoption and on an ongoing basis.

30 Section 1500 of the SEC’s Division of Corporation Finance’s Financial Reporting Manual,Interim Period Reporting Considerations (All Filings): Interim Period Financial StatementDisclosures upon Adoption of a New Accounting Standard.


Appendix A: Extract from EY’s IFRS Disclosure Checklist

Disclosure madeYes No N/A

IFRS 15 Revenue from Contracts with CustomersIFRS 15 Revenue from Contracts with Customers was issued in May 2014. It applies to allcontracts with customers, with limited exceptions. IFRS 15 is effective for annual periodsbeginning on or after 1 January 2018. Earlier application is permitted. If an entity appliesIFRS 15 earlier, it shall disclose that fact.Clarifications to IFRS 15 Revenue from Contracts with Customers was issued in April 2016.An entity must apply those amendments for annual reporting periods beginning on or after1 January 2018. Earlier application is permitted. If an entity applies those amendments foran earlier period, it must disclose that fact.Transition to IFRS 15

IFRS 15.C3

IFRS 15.C2

An entity adopts IFRS 15 using one of the following two methods:a. Retrospectively to each prior reporting period presented in accordance with IAS 8

Accounting Policies, Changes in Accounting Estimates and Errors, subject to theexpedients in IFRS 15.C5

Orb. Retrospectively with the cumulative effect of initially applying IFRS 15 recognised at the

date of initial application in accordance with IFRS 15.C7–C8

For the purposes of the transition requirements:a. The date of initial application is the start of the reporting period in which an entity first

applies IFRS 15b. A completed contract is a contract for which the entity has transferred all of the goods or

services identified in accordance with IAS 11 Construction Contracts, IAS 18 Revenue andrelated Interpretations

IFRS 15.C1 If the entity applies IFRS 15 in its annual IFRS financial statements for a period that beginsbefore 1 January 2018, does it disclose that factFull retrospective approach

IFRS 15.C3(a)IAS 8.22

If IFRS 15 is applied retrospectively in accordance with IFRS 15.C3(a), does the entitydisclose the adjustment to the opening balance of each affected component of equity for theearliest prior period presented and the other comparative amounts for each prior periodpresented as if the entity had always applied the new accounting policy

IAS 8.28 If the initial application of IFRS 15 has an effect on the current period or any prior periodpresented or might have an effect on future periods, unless it is impracticable to determine theamount of the adjustment, does the entity disclose:a. The title of the IFRSb. That the change in accounting policy is in accordance with its transitional provisions, if

applicablec. The nature of the change in accounting policyd. The description of transitional provisions, if applicablee. The transitional provisions that might have an effect on future periods, if applicable

IAS 33.2 f. The amount of the adjustment for each financial statement line item affected and the basicand diluted earnings per share for the annual period immediately preceding the first annualperiod for which IFRS 15 is applied, to the extent practicable (if IAS 33 applies to theentity)

IFRS 15.C4IAS 8.28(f)

Notwithstanding the requirements of IAS 8.28, when IFRS 15 is first applied, an entity needonly present the quantitative information required by IAS 8.28(f) for the annual periodimmediately preceding the first annual period for which IFRS 15 is applied (the ‘immediatelypreceding period’) and only if the entity applies IFRS 15 retrospectively in accordance withIFRS 15.C3(a). An entity may also present this information for the current period or forearlier comparative periods, but is not required to do so.g. The amount of the adjustment relating to periods before those presented, to the extent

practicableh. If retrospective application is impracticable for a particular prior period, or for periods

before those presented, the circumstances that led to the existence of that condition and adescription of how and from when the change in accounting policy has been applied



Financial statements of subsequent periods need not repeat these disclosures.IFRS 15.C6 Does the entity disclose all of the following for any of the practical expedients in IFRS 15.C5

that it uses:a. The expedients that have been usedb. To the extent reasonably possible, a qualitative assessment of the estimated effect of

applying each of those expedientsIFRS 15.C5 An entity may use one or more of the following practical expedients when applying IFRS 15

retrospectively under IFRS 15.C3(a):a. For completed contracts, an entity need not restate contracts that begin and end within

the same annual reporting period; or are completed contracts at the beginning of theearliest period presented.

b. For completed contracts that have variable consideration, an entity may use thetransaction price at the date the contract was completed rather than estimating variableconsideration amounts in the comparative reporting periods.

c. For contracts that were modified before the beginning of the earliest period presented, anentity need not retrospectively restate the contract for those contract modifications inaccordance with IFRS 15.20-21. Instead, an entity shall reflect the aggregate effect of allof the modifications that occur before the beginning of the earliest period presented when:(i) identifying the satisfied and unsatisfied performance obligations; (ii) determining thetransaction price; and (iii) allocating the transaction price to the satisfied and unsatisfiedperformance obligations.

d. For all reporting periods presented before the date of initial application, an entity need notdisclose the amount of the transaction price allocated to the remaining performanceobligations and an explanation of when the entity expects to recognise that amount asrevenue (see IFRS 15.120).

Modified retrospective approachIFRS 15.C8IFRS 15.C3(b)

If IFRS 15 is applied retrospectively in accordance with IFRS 15.C3(b), for reporting periodsthat include the date of initial application does the entity provide both of the following:a. The amount by which each financial statement line item is affected in the current reporting

period by the application of IFRS 15 as compared to IAS 11, IAS 18 and relatedInterpretations that were in effect before the change

b. An explanation of the reasons for significant changes identified in IFRS 15.C8(a)IFRS 15.C7 If an entity elects to apply IFRS 15 retrospectively in accordance with IFRS 15.C3(b), the

entity must recognise the cumulative effect of initially applying IFRS 15 as an adjustment tothe opening balance of retained earnings (or other component of equity, as appropriate) ofthe annual reporting period that includes the date of initial application. Under this transitionmethod, an entity may elect to apply IFRS 15 retrospectively only to contracts that are notcompleted contracts at the date of initial application (for example, 1 January 2018 for anentity with a 31 December year-end).

IFRS 15.C7A Does the entity disclose the following for any of the practical expedients in IFRS 15.C7A thatit uses:a. The expedients that have been usedb. To the extent reasonably possible, a qualitative assessment of the estimated effect of

applying each of those expedientsIFRS 15.C7A When applying IFRS 15 retrospectively under IFRS 15.C3(b), an entity may use the following

practical expedient: for contracts that were modified before the beginning of the earliestperiod presented, an entity need not retrospectively restate the contract for those contractmodifications in accordance with paragraphs 20-21. Instead, an entity shall reflect theaggregate effect of all of the modifications that occur before the beginning of the earliestperiod presented when: (i) identifying the satisfied and unsatisfied performance obligations;(ii) determining the transaction price; and (iii) allocating the transaction price to the satisfiedand unsatisfied performance obligations. An entity may apply this expedient either:a. For all contract modifications that occur before the beginning of the earliest period

presented Orb. for all contract modifications that occur before the date of initial applicationFirst-time adopter of IFRS

IFRS 1.D34IFRS 15.C6

If a first-time adopter of IFRS applies IFRS 15 on transition to IFRS, does the entity disclosethe following for any of the practical expedients in IFRS 15.C5 that the entity uses:a. The expedients that have been usedb. To the extent reasonably possible, a qualitative assessment of the estimated effect of

applying each of those expedientsIFRS 1.D34-35 A first-time adopter may apply the transition provisions in paragraph C5 of IFRS 15. In those

paragraphs references to the ‘date of initial application’ must be interpreted as the beginningof the first IFRS reporting period. If a first-time adopter decides to apply those transitionprovisions, it must also apply IFRS 15.C6.A first-time adopter is not required to restate contracts that were completed before theearliest period presented. A completed contract is a contract for which the entity hastransferred all of the goods or services identified in accordance with previous GAAP.



PresentationIFRS 15.105 Does the entity present any unconditional rights to consideration separately as a receivableIFRS 15.108 A receivable is an entity’s right to consideration that is unconditional. A right to consideration

is unconditional if only the passage of time is required before payment of that considerationis due. For example, an entity would recognise a receivable if it has a present right topayment even though that amount may be subject to refund in the future. An entity mustaccount for a receivable in accordance with IFRS 9 or IAS 39, as applicable.

IFRS 15.108 Upon initial recognition of a receivable from a contract with a customer, does the entitypresent any difference between the measurement of the receivable in accordance with IFRS 9or IAS 39, as applicable, and the corresponding amount of revenue as an expense (forexample, as an impairment loss)

IFRS 15.107 If the entity performs by transferring goods or services to a customer before the customerpays consideration or before payment is due, does the entity present the contract as acontract asset, excluding any amounts presented as a receivable

IFRS 15.107 A contract asset is an entity’s right to consideration in exchange for goods or services thatthe entity has transferred to a customer. An entity must assess a contract asset forimpairment in accordance with IFRS 9 or IAS 39, as applicable. An impairment of a contractasset shall be measured, presented and disclosed on the same basis as a financial asset thatis within the scope of IFRS 9 or IAS 39, as applicable (see also paragraph IFRS15.113(b)).

IFRS 15.106 If a customer pays consideration, or the entity has a right to an amount of consideration thatis unconditional (i.e., a receivable), before the entity transfers a good or service to thecustomer, does the entity present the contract as a contract liability when the payment ismade or the payment is due (whichever is earlier)

IFRS 15.106 A contract liability is an entity’s obligation to transfer goods or services to a customer forwhich the entity has received consideration (or an amount of consideration is due) from thecustomer.

IFRS 15.109 If the entity uses an alternative description for a contract asset, does the entity providesufficient information for a user of the financial statements to distinguish betweenreceivables and contract assets

IFRS 15.109 IFRS 15 uses the terms ‘contract asset’ and ‘contract liability’ but does not prohibit an entityfrom using alternative descriptions in the statement of financial position for those items.The existence of a significant financing component in the contract

IFRS 15.65 Does the entity present the effects of financing (interest revenue or interest expense)separately from revenue from contracts with customers in the statement of comprehensiveincome

IFRS 15.65 Interest revenue or interest expense is recognised only to the extent that a contract asset (orreceivable) or a contract liability is recognised in accounting for a contract with a customer.Sale with a right of return

IFRS 15.B25 Does the entity present the asset for an entity’s right to recover products from a customer onsettling a refund liability separately from the refund liability

IFRS 15.B25 An asset recognised for an entity’s right to recover products from a customer on settling arefund liability shall initially be measured by reference to the former carrying amount of theproduct (for example, inventory) less any expected costs to recover those products (includingpotential decreases in the value to the entity of returned products). At the end of eachreporting period, an entity must update the measurement of the asset arising from changesin expectations about products to be returned.Disclosures

IFRS 15.110

IFRS 15.111

IFRS 15.112

The objective of the disclosure requirements in IFRS 15 is for an entity to disclose sufficientinformation to enable users of financial statements to understand the nature, amount, timingand uncertainty of revenue and cash flows arising from contracts with customers.An entity must consider the level of detail necessary to satisfy the disclosure objective andhow much emphasis to place on each of the various requirements. An entity must aggregateor disaggregate disclosures so that useful information is not obscured by either the inclusionof a large amount of insignificant detail or the aggregation of items that have substantiallydifferent characteristics.

An entity need not disclose information in accordance with IFRS 15 if it has provided theinformation in accordance with another standard.

IFRS 15.110 To achieve the disclosure objective stated in IFRS 15.110, does the entity disclose qualitativeand quantitative information about all of the following:a. Its contracts with customers (see IFRS 15.113-122)b. The significant judgements, and changes in the judgements, made in applying IFRS 15 to

those contracts (see IFRS 15.123-126)c. Any assets recognised from the costs to obtain or fulfil a contract with a customer in

accordance with IFRS 15.91 or IFRS 15.95 (see IFRS15.127-128)



Contracts with customersIFRS 15.113 Does the entity disclose all of the following amounts for the reporting period unless those

amounts are presented separately in the statement of comprehensive income in accordancewith other standards:a. Revenue recognised from contracts with customers, which the entity must disclose

separately from its other sources of revenueb. Any impairment losses recognised (in accordance with IFRS 9 or IAS 39, as applicable) on

any receivables or contract assets arising from the entity’s contracts with customers,which the entity must disclose separately from impairment losses from other contracts

Disaggregation of revenueIFRS 15.114 Does the entity disaggregate revenue recognised from contracts with customers into

categories that depict how the nature, amount, timing and uncertainty of revenue and cashflows are affected by economic factors

IFRS 15.B87

IFRS 15.B88

IFRS 15.B89

IFRS 15.114 requires an entity to disaggregate revenue from contracts with customers intocategories that depict how the nature, amount, timing and uncertainty of revenue and cashflows are affected by economic factors. Consequently, the extent to which an entity’srevenue is disaggregated for the purposes of this disclosure depends on the facts andcircumstances that pertain to the entity’s contracts with customers. Some entities may needto use more than one type of category to meet the objective in IFRS 15.114 fordisaggregating revenue. Other entities may meet the objective by using only one type ofcategory to disaggregate revenue.

When selecting the type of category (or categories) to use to disaggregate revenue, an entitymust consider how information about the entity’s revenue has been presented for otherpurposes, including all of the following:a. Disclosures presented outside the financial statements (for example, in earnings releases,

annual reports or investor presentations)b. Information regularly reviewed by the chief operating decision maker for evaluating the

financial performance of operating segmentsc. Other information that is similar to the types of information identified in IFRS 15.B88(a)

and (b) and that is used by the entity or users of the entity’s financial statements toevaluate the entity’s financial performance or make resource allocation decisions

Examples of categories that might be appropriate include, but are not limited to, all of thefollowing:► Type of good or service (for example, major product lines)► Geographical region (for example, country or region)► Market or type of customer (for example, government and non-government customers)► Type of contract (for example, fixed-price and time-and-materials contracts)► Contract duration (for example, short-term and long-term contracts)► Timing of transfer of goods or services (for example, revenue from goods or services

transferred to customers at a point in time and revenue from goods or servicestransferred over time)

► Sales channels (for example, goods sold directly to consumers and goods sold throughintermediaries)

IFRS 15.115 If the entity applies IFRS 8 Operating Segments, does the entity disclose sufficientinformation to enable users of financial statements to understand the relationship betweenthe disclosure of disaggregated revenue (in accordance with IFRS 15.114) and revenueinformation that is disclosed for each reportable segmentContract balances

IFRS 15.116 Does the entity disclose all of the following:a. The opening and closing balances of receivables, contract assets and contract liabilities

from contracts with customers, if not otherwise separately presented or disclosedb. Revenue recognised in the reporting period that was included in the contract liability

balance at the beginning of the periodc. Revenue recognised in the reporting period from performance obligations satisfied (or

partially satisfied) in previous periods (for example, changes in transaction price)IFRS 15.117IFRS 15.119

Does the entity explain how the timing of satisfaction of its performance obligations (see IFRS15.119(a)) relates to the typical timing of payment (see IFRS 15.119(b)) and the effect thatthose factors have on the contract asset and contract liability balances; the explanationprovided may use qualitative information



IFRS 15.118 Does the entity provide an explanation (with both qualitative and quantitative information) ofthe significant changes in the contract asset and the contract liability balances during thereporting period

IFRS 15.118 Examples of changes in the entity’s balances of contract assets and contract liabilities includeany of the following:a. Changes due to business combinationsb. Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or

contract liability, including adjustments arising from a change in the measure of progress, achange in an estimate of the transaction price (including any changes in the assessment ofwhether an estimate of variable consideration is constrained) or a contract modification

c. Impairment of a contract assetd. A change in the time frame for a right to consideration to become unconditional (ie for a

contract asset to be reclassified to a receivable)e. A change in the time frame for a performance obligation to be satisfied (i.e., for the

recognition of revenue arising from a contract liability)Performance obligations

IFRS 15.119 Does the entity disclose information about its performance obligations in contracts withcustomers, including a description of all of the following:a. When the entity typically satisfies its performance obligations (for example, upon

shipment, upon delivery, as services are rendered or upon completion of service), includingwhen performance obligations are satisfied in a bill-and-hold arrangement

b. The significant payment termsIFRS 15.119 For example, when payment is typically due, whether the contract has a significant financing

component, whether the consideration amount is variable and whether the estimate ofvariable consideration is typically constrained in accordance with IFRS 15.56–58.c. The nature of the goods or services that the entity has promised to transfer, highlighting

any performance obligations to arrange for another party to transfer goods or services(i.e., if the entity is acting as an agent)

d. Obligations for returns, refunds and other similar obligationse. Types of warranties and related obligationsTransaction price allocated to the remaining performance obligations

IFRS 15.120 Does the entity disclose all of the following information about its remaining performanceobligations:a. The aggregate amount of the transaction price allocated to the performance obligations

that are unsatisfied (or partially unsatisfied) as of the end of the reporting periodb. An explanation of when the entity expects to recognise as revenue the amount disclosed in

accordance with IFRS 15.120(a), which the entity discloses in either of the following ways:► On a quantitative basis using the time bands that would be most appropriate for the

duration of the remaining performance obligations► By using qualitative information

IFRS 15.121 As a practical expedient, an entity need not disclose the information in IFRS 15.120 for aperformance obligation if either of the following conditions is met:a. The performance obligation is part of a contract that has an original expected duration of

one year or less.IFRS 15.B16 b. The entity recognises revenue from the satisfaction of the performance obligation in

accordance with IFRS 15.B16.That is, if an entity has a right to consideration from a customer in an amount thatcorresponds directly with the value to the customer of the entity’s performance completed todate (for example, a service contract in which an entity bills a fixed amount for each hour ofservice provided), as a practical expedient, the entity may recognise revenue in the amountto which the entity has a right to invoice.

IFRS 15.122 Does the entity explain qualitatively whether it is applying the practical expedient inIFRS 15.121 and whether any consideration from contracts with customers is not included inthe transaction price and, therefore, not included in the information disclosed in accordancewith IFRS 15.120Significant judgements in the application of IFRS 15

IFRS 15.123 Does the entity disclose the judgements, and changes in the judgements, made in applyingIFRS 15 that significantly affect the determination of the amount and timing of revenue fromcontracts with customers. In particular, does the entity explain the judgements, and changesin the judgements, used in determining both of the following:a. The timing of satisfaction of performance obligations (see IFRS 15.124-125)b. The transaction price and the amounts allocated to performance obligations (see

IFRS 15.126)Determining the timing of satisfaction of performance obligations

IFRS 15.124 For performance obligations that the entity satisfies over time, does the entity disclose bothof the following:a. The methods used to recognise revenue (for example, a description of the output methods

or input methods used and how those methods are applied)b. An explanation of why the methods used provide a faithful depiction of the transfer of

goods or servicesIFRS 15.125 For performance obligations satisfied at a point in time, does the entity disclose the

significant judgements made in evaluating when a customer obtains control of promisedgoods or services



Determining the transaction price and the amounts allocated to performanceobligations

IFRS 15.126 Does the entity disclose information about the methods, inputs and assumptions used for allof the following:a. Determining the transaction price, which includes, but is not limited to, estimating variable

consideration, adjusting the consideration for the effects of the time value of money andmeasuring non-cash consideration

b. Assessing whether an estimate of variable consideration is constrainedc. Allocating the transaction price, including:

► Estimating stand-alone selling prices of promised goods or services► Allocating discounts to a specific part of the contract (if applicable)► Allocating variable consideration to a specific part of the contract (if applicable)

d. Measuring obligations for returns, refunds and other similar obligationsAssets recognised from the costs to obtain or fulfil a contract with a customer

IFRS 15.127 Does the entity describe both of the following:a. The judgements made in determining the amount of the costs incurred to obtain or fulfil a

contract with a customerb. The method it uses to determine the amortisation for each reporting period

IFRS 15.128 Does the entity disclose all of the following:a. The closing balances of assets recognised from the costs incurred to obtain or fulfil a

contract with a customer (in accordance with IFRS 15.91 or IFRS 15.95), by main categoryof asset (for example, costs to obtain contracts with customers, pre-contract costs andsetup costs)

b. The amount of amortisation recognised in the reporting periodc. The amount of any impairment losses recognised in the reporting periodPractical expedients

IFRS 15.129 If the entity elects to use the practical expedient in IFRS15.63 regarding the existence of asignificant financing component, does the entity disclose that fact

IFRS 15.63 As a practical expedient, an entity need not adjust the promised amount of consideration forthe effects of a significant financing component if the entity expects, at contract inception,that the period between when the entity transfers a promised good or service to a customerand when the customer pays for that good or service will be one year or less.

IFRS 15.129 If the entity elects to use the practical expedient in IFRS15.94 regarding the incrementalcosts of obtaining a contract, does the entity disclose that fact

IFRS 15.94 As a practical expedient, an entity may recognise the incremental costs of obtaining acontract as an expense when incurred if the amortisation period of the asset that the entityotherwise would have recognised is one year or less.Statement of profit or loss and other comprehensive income

IAS 1.32 Unless required or permitted by another IFRS, does the entity present separately, and notoffset, income and expenses

IAS 1.34

IAS 1.35

Examples of items that are or may be offset in the statement of comprehensive incomeinclude the following:a. Gains and losses on the disposal of non-current assets, including investments andoperating assets, are reported by deducting from the proceeds (or the amount ofconsideration when an entity applies IFRS 15 early) on disposal the carrying amount of theasset and related selling expensesb. Expenditure related to a provision that is recognised in accordance with IAS 37 Provisions,Contingent Liabilities and Contingent Assets and reimbursed under a contractualarrangement with a third party (for example, a supplier’s warranty agreement) may be nettedagainst the related reimbursement.c. Gains and losses arising from a group of similar transactions are reported on a net basis,for example, foreign exchange gains and losses or gains and losses arising on financialinstruments held for trading. However, an entity presents such gains and losses separately ifthey are material.Condensed interim reportingExplanatory notes

IAS 34.16A Does the entity disclose the following information in the notes to its interim financialstatements or elsewhere in the interim financial report (the information is normally reportedon a financial year-to-date basis):The following disclosures shall be given either in the interim financial statements orincorporated by cross-reference from the interim financial statements to some otherstatement (such as management commentary or risk report) that is available to users of thefinancial statements on the same terms as the interim financial statements and at the sametime. If users of the financial statements do not have access to the information incorporatedby cross-reference on the same terms and at the same time, the interim financial report isincomplete.…

l. The disaggregation of revenue from contracts with customers required by IFRS 15.114-115

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About EY’s International Financial Reporting Standards GroupA global set of accounting standards provides the global economy with one measure to assess and compare the performance of companies. For companies applying or transitioning to International Financial Reporting Standards (IFRS), authoritative and timely guidance is essential as the standards continue to change. The impact stretches beyond accounting and reporting, to key business decisions you make. We have developed extensive global resources — people and knowledge — to support our clients applying IFRS and to help our client teams. Because we understand that you need a tailored service as much as consistent methodologies, we work to give you the benefit of our deep subject matter knowledge, our broad sector experience and the latest insights from our work worldwide.

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