IFRS 15 Revenue from Contracts with Customers

Income as defined by the IASB conceptual framkwork includes both revenues and gains

Income arising in the ordinary course of an entity's activities and it may be caleed differenct names: sales, fees, interest,dividents or royalties

收入： 日常活动中形成的，会导致所有者权益增加的、与所有者投入资本无关

Revenue is usally the largest amount in a statement of profit or loss so it is important that it is correctly stated

Revenue: Income arising in the course of an entity’s ordinary activities.

Income: Increases in economic benefits in the form of inflows or enhancements of assets or decreases of liabilities that result in an increase in equity (other than those from equity participants).

Contract:  An agreement between two or more parties that creates enforceable rights and obligations.

销售合同：双方或多方之间产生可执行的权利和义务协议

Customer: A party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.

Distinct: Refer to Step 2 below.

Stand-alone selling price:  The price at which a promised good or service would be sold separately to a customer.

独立销售价格：承诺的商品或服务将单独出售给客户的价格。

Performance obligation:

A promise to transfer to the customer either:

(i) A distinct (bundle of) good(s) or service(s)

(ii) A series of substantially the same distinct goods or services that have the same pattern of transfer to the customer, and the pattern of transfer is both over time and represents the progress towards

complete satisfaction of the performance obligation.

Applies to all contracts with customers, except:

 Lease contracts (refer to IFRS 16)

 Insurance contracts (refer to IFRS 4 / IFRS 17)

 Financial instruments and other contractual rights or obligations (refer to IFRS 9/IAS 39,IFRS 10, IFRS 11, IAS 27, and IAS 28)

 Certain non-monetary exchanges.

THE ‘FIVE STEP’ MODEL

Revenue from contracts with customers is recognised based on the application of a principle-based ‘five step’ model:

Step 1 Identify…the contract 识别与客户订立的合同

Step 2 Identify……the performance obligation(s) 识别合同中的单项履约的义务

Step 3 Determine……the transaction price 确定交易价格

Step 4 Allocate…the transaction price to each performance obligation 将交易价格分摊至各单项履约义务

Step 5 Recognise… revenue when each performance obligation is satisfied 履行每一单项履约义务时确认收入

Features of a ‘contract’ under IFRS 15

Contracts, and approval of contracts, can be written, oral or implied by an entity’s customary business practices.

IFRS 15 requires contracts to have all of the following attributes:

 The contract has been approved 合同已获批准

 The rights and payment terms regarding goods and services to be transferred can be identified 可以确定要转让的货物和服务的权利和付款条件

 The contract has commercial substance 该合同具有商业实质

 It is probable that the consideration will be received (considering only the customer’s ability and intention to pay).很可能会收到对价（仅考虑客户的支付能力和意图）

If each party to the contract has a unilateral enforceable right to terminate a wholly unperformed contract without compensating the other party (or parties), no contract exists under IFRS 15.

如果合同的每一方都有单方面可执行的权利终止完全未履行的合同，而不赔偿另一方（或各方），则根据国际财务报告准则第15号，不存在合同。

Contract modifications A change in enforceable rights and obligations (i.e. scope and/or price) is only accounted for as a contract modification if it has been approved, and creates new or changes existing enforceable rights and obligations. 

Contract modifications are accounted for as a separate contract if, and only if:

 The contract scope changes due to the addition of distinct goods or services, and

 The change in contract price reflects the standalone selling price of the distinct good or service.

Contract modifications that are not accounted for as a separate contract are accounted for as either:

(i) Replacement of the original contract with a new contract (if the remaining goods or services under the original contract are distinct from those already transferred to the customer)

(ii) Continuation of the original contract (if the remaining goods or services under the original contract are not distinct from those already transferred to the customer, and the performance obligation is partially satisfied at modification date).

(iii) Mixture of (i) and (ii) (if elements of both exist). 

Combining multiple contracts

Contracts are combined if they are entered into at (or near) the same time, with the same customer, if

either:

 The contracts are negotiated as a package with a single commercial objective

 The consideration for each contract is interdependent on the other, or

 The overall goods or services of the contracts represent a single performance obligation.

Combining multiple contracts

Contracts are combined if they are entered into at (or near) the same time, with the same customer, if either:

 The contracts are negotiated as a package with a single commercial objective

 The consideration for each contract is interdependent on the other, or

 The overall goods or services of the contracts represent a single performance obligation.

Performance obligations are the contractual promise by an entity, to transfer to a customer, distinct goods or services, either individually, in a bundle,or as a series over time (Refer to the ‘Definitions’ section above).

Activities of the entity that do not result in a transfer of goods or services to the customer (e.g. certain internal administrative ‘set-up activities’) are not performance obligations of the contract with the customer and do not give rise to

revenue.

DEFINITION OF ‘DISTINCT’ (TWO CRITERIA TO BE MET)

(i) The customer can ‘benefit’ from the good or service Benefit from the good or service can be through either:

 Use, consumption, or sale (but not as scrap) 

 Held in a way to generate economic benefits. Benefit from the good or service can be either:

 On its own

 Together with other readily available resources (i.e. those which can be acquired by the customer from the entity or other parties).

DETERMINE THE TRANSACTION PRICE

The transaction price is the amount of consideration an entity expects to be entitled to in exchange for transferring the promised goods or services (not amounts collected on behalf of third parties, e.g. sales taxes or value added taxes).

The transaction price may be affected by the nature, timing, and amount of consideration, and includes consideration of significant financing components, variable components, amounts payable to the customer (e.g. refunds and rebates), and non-cash amounts.

交易价格是实体希望有权获得的对价金额，以换取转让承诺的货物或服务（不是代表第三方收取的金额，例如销售税或增值税）。

交易价格可能受到对价的性质、时间和金额的影响，包括对重要融资组成部分、可变组成部分、应付给客户的金额（如退款和回扣）的考虑，以及非现金金额。

Accounting for a significant financing component

If the timing of payments specified in the contract provides either the customer or the entity with a significant benefit of financing the transfer of goods or services. The transaction price is adjusted to reflect the cash selling price at the point in time control of the goods or services is transferred. A significant financing component can either be explicit or implicit.

如果合同中规定的付款时间为客户或实体提供了为货物或服务转让融资的重大利益。调整交易价格，以反映商品或服务控制权转移时的现金售价。一个重要的融资组成部分可以是显性的，也可以是隐性的。

Factors to consider include 需要考虑的因素包括：:

 Difference between the consideration and cash selling price 对价与现金售价之间的差异

 Combined effect of interest rates in the relevant market and length of time between transfer of control of the goods or services and payment. 

相关市场利率和货物或服务控制权转移与支付之间的时间长度的综合影响。

A significant financing component does not exist when 在以下情况下，不存在重要的融资组成部分

 The customer paid in advance and timing of the transfer of control of the goods or services is at the customer’s discretion

客户提前付款，货物或服务控制权的转移时间由客户自行决定

 The consideration is variable with the amount or timing based on factors outside of the control of the parties

根据双方无法控制的因素，对价会随着金额或时间而变化

 The difference between the consideration and cash selling price arises for other non-financing reasons (i.e. performance protection). 

对价和现金售价之间的差异是由于其他非融资原因（即履约保护）造成的

Discount rate to be used 。使用的折扣率

 Must reflect credit characteristics of the party receiving the financing and any collateral/security provided. Practical expedient – period between transfer and payment is 12 months or less

必须反映接受融资的一方的信用特征以及提供的任何抵押品/担保。实际权宜之计——转账和付款之间的时间为12个月或更短

 Do not account for any significant financing component.不考虑任何重要的融资组成部分。

Accounting for variable consideration

E.g. Discounts, rebates, refunds, credits, concessions, incentives, performance bonuses, penalties, and contingent

payments.

Variable consideration must be estimated using either:

(i) Expected value method: based on probability weighted amounts within a range (i.e. for large number of similar

contracts)

(ii) Single most likely amount: the amount within a range that is most likely to arise.

Constraining (limiting) the estimates of variable consideration

 Variable consideration is only recognised if it is highly probable that a subsequent change in its estimate would not

result in a significant revenue reversal (i.e. a significant reduction in cumulative revenue recognised).

Accounting for consideration payable to the customer

Includes cash paid (or expected to be paid) to the customer (or the customer’s customers) as well as credits or other

items such as coupons and vouchers.

Accounted for as a reduction in the transaction price, unless payment is in exchange for a good or service received from

the customer in which case no adjustment is made – except where:

 The consideration paid exceeds the fair value of the goods or services received (the difference is set against the

transaction price)

 The fair value of the goods or services cannot be reliably determined (full amount taken against the transaction

price).

Accounting for non-cash consideration

Is accounted for at fair value (if n