IFRS 15: the revenue standard

All IFRS reporters will be impacted by IFRS 15 when it becomes effective in 2018. Some industries will experience greater changes than others. The impact to your business, systems, data needs and financial reporting will be far reaching.

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IFRS 15 Revenue: Practical experiences from the market

In this webcast, our experts discuss their practical experiences from the market as well as the challenges and opportunities presented by the new IFRS 15 revenue standard.

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About IFRS 15

Why is it an issue?

  • The new standard replaces existing IFRS revenue recognition guidance
  • May result in a substantial change in the amount and timing of revenue recognition
  • Significantly more qualitative and quantitative disclosures are required.

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The impacts

  • Revenue from bundled goods and services requires separation and may result in deferring or accelerating revenue
  • The provision of incentives to purchase (e.g. free goods or services provided as part of a sale) may require separation
  • Modifications to long term contracts are likely to take place over the contract term
  • Explicit guidance on the treatment of licenses may change the timing of revenue recognition
  • The guidance on contract costs is expected to result in the recognition of more assets.

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What should you consider?

  • Your method of adoption (full retrospective or modified retrospective)
  • Stakeholders will need access to consistent historical financial records including quantification of the effect of IFRS 15 on the accounts
  • Choosing the right system for the future – system implementation can take a number of years to get right, you may need an interim solution to meet the requirements of adoption
  • Bear in mind other changes in IFRS – IFRS 9 (financial instruments) in 2018 and IFRS 16 (leases) in 2019.

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Next steps

Companies are at varying stages of readiness for IFRS 15 adoption. The time has come to translate theory into practice. Key questions to consider:

  • Do you have a complete project plan?
  • Have you secured the resources to deliver the plan?
  • Could you provide stakeholders and the market with the numbers this year?

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Five step model

Identify the contract

Relevant technical issues

  • Contract modifications

Possible impact

  • Increase/decrease in revenue for the year as certain modifications will now result in cumulative a catch-up adjustment

Separate performance obligations

Relevant technical issues

  • Complex contracts with many deliverables
  • Implementation, installation and customisation services
  • Implicit promises to the customer (not necessarily listed in the contract)

Possible impact

  • Revenue to be allocated to distinct performance obligations

Determine transaction price

Relevant technical issues

  • Variable consideration (e.g. rebates, discounts, performance bonuses)
  • Time value of money

Possible impact

  • Often earlier revenue recognition when contingencies exist
  • Increase in revenue or increase in finance income if financing element is significant

Allocate transaction price

Relevant technical issues

  • Standalone selling prices (major impact for complex contracts with many performance obligations)
  • Free goods or services

Possible impact

  • More estimation and different revenue profile
  • Increase/decrease in revenue for the year as an allocation must be made to these

Recognise revenue

Relevant technical issues

  • Transfer of control must be assessed
  • Explicit guidance on over-time recognition

Possible impact

  • Potentially increase/decrease revenue for a year if the timing of recognition changes
  • Re-assessment needed to support any current over-time basis, which could lead to a change to ‘point in time’ if unsupportable


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Richard Veysey

Partner, Accounting Change, PwC United Kingdom

Tel: +44 (0)7718 976 960

Chris Jackson

Partner, Accounting Change, PwC United Kingdom

Tel: +44 (0)7718 581 150

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