Grant Thornton International Ltd has published two new publications in the Insights into IFRS 15 series:
• Step 2: Identifying a performance obligation;
• Principal versus agent considerations.
Revenue recognition is fundamental in all businesses, and it is important that it is recognized in a consistent and comparable way across industries and capital markets. IFRS 15 Revenue from Contracts with Customers was a result of the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) joint project to improve the financial reporting of revenue under IFRS Accounting Standards and US GAAP. The standard makes it clear that its purpose is not to redefine the concept of revenue, but rather to ensure that revenue is consistently recognized at the appropriate time and at the most reliable amount.
The Insights into IFRS 15 series summarizes the key areas of the standard, highlighting some areas that are challenging to apply in practice, to assist reporting entities in understanding how to apply IFRS 15’s requirements.
The first new publication looks at step two of IFRS 15’s five-step model, which covers the identification of performance obligations – the key units of account of IFRS 15. The second new publication covers whether a party to a contract is acting as a principal or as an agent. This can require applying significant judgement and will affect how revenue is recognized.
The new publications are as follows:
- Step 2: Identifying a performance obligation;
- Principal versus agent co.