7.4.1.A
Interaction between the two allocation
exceptions: variable discounts .................................... 2169
7.5
Changes in transaction price after contract inception ................................ 2169
7.6
Allocation of transaction price to components outside the scope of
IFRS 15 .................................................................................................................. 2170
8 IFRS 15 – SATISFACTION OF PERFORMANCE OBLIGATIONS ...................... 2171
8.1
Performance obligations satisfied over time ................................................. 2173
8.1.1
Changing from point in time under legacy standards to
recognising revenue over time under IFRS 15 .............................. 2174
8.1.2
Customer simultaneously receives and consumes benefits
as the entity performs ........................................................................ 2174
8.1.2.A
Evaluating whether a customer simultaneously
receives and consumes the benefits of a
commodity as the entity performs ............................. 2176
8.1.3
Customer controls the asset as it is created or enhanced .......... 2177
Revenue
1965
8.1.4
Asset with no alternative use and right to payment .................... 2177
8.1.4.A
Alternative use ................................................................ 2178
8.1.4.B Enforceable
right
to payment for performance
completed to date ......................................................... 2180
8.1.4.C
What to consider when assessing whether
performance creates an asset with no
alternative use................................................................. 2185
8.1.4.D Determining
whether an entity has an
enforceable right to payment ...................................... 2186
8.1.4.E Enforceable
right
to
payment: does an entity
need a present unconditional right to
payment? .......................................................................... 2186
8.1.4.F
Enforceable right to payment: non-refundable
upfront payments that represent the full
transaction price ............................................................ 2187
8.1.4.G Determining
whether an entity has an
enforceable right to payment for a contract
priced at a loss ................................................................ 2187
8.1.4.H
Enforceable right to payment determination
when not entitled to a reasonable profit
margin on standard inventory materials
purchased, but not yet used ......................................... 2188
8.1.4.I Considerations
when assessing the over-time
criteria for the sale of a real estate unit ..................... 2188
8.2
Measuring progress over time ......................................................................... 2190
8.2.1
Output methods .................................................................................. 2192
8.2.1.A
Practical expedient for measuring progress
towards satisfaction of a performance obligation ........ 2193
8.2.2
Input methods ..................................................................................... 2194
8.2.2.A
Adjustments to the measure of progress based
on an input method ....................................................... 2195
8.2.3
Examples of measures of progress .................................................. 2198
8.2.4
Implementation questions on measuring progress over time ......... 2198
8.2.4.A
Measuring progress toward satisfaction of a
stand-ready obligation that is satisfied over time ........ 2198
8.2.4.B
Selecting a measure of progress when there is
more than one promised good or service
within a performance obligation................................. 2199
8.2.4.C
Determining the appropriate single measure of
progress for a combined performance
obligation that is satisfied over time .......................... 2199
8.2.4.D
Can control of a good or service underlying a
performance obligation satisfied over time be
transferred at discrete points in time? ...................... 2200
1966 Chapter 28
8.2.4.E
Use of the ‘right to invoice’ practical expedient
for a contract that includes rates that change
over the contractual term ............................................ 2200
8.2.4.F
Recognising revenue when fulfilment costs are
incurred prior to the contract establishment
date for a specifically anticipated contract ...............2201
8.3
Control transferred at a point in time .............................................................2201
8.3.1
Effect of shipping terms when an entity has transferred
control of a good to a customer ...................................................... 2205
8.3.2 Customer
acceptance
.......................................................................
2205
8.4
Repurchase agreements ................................................................................... 2208
8.4.1
Forward or call option held by the entity .................................... 2209
8.4.1.A
Conditional call options to remove and replace
expired products (e.g. out-of-date perishable
goods, expired medicine) ............................................. 2211
8.4.2
Put option held by the customer ..................................................... 2212
8.4.3
Sales with residual value guarantees .............................................. 2213
8.5
Consignment arrangements .............................................................................. 2214
8.6 Bill-and-hold
arrangements
.............................................................................. 2215
8.7
Recognising revenue for licences of intellectual property ......................... 2218
8.8
Recognising revenue when a right of return exists ...................................... 2218
8.9
Recognising revenue for customer options for additional goods or
services ................................................................................................................. 2219
8.10 Breakage and prepayments for future goods or services ........................... 2219
8.10.1
Implementation questions on breakage ......................................... 2221
8.10.1.A
Are customers’ unexercised rights (i.e. breakage)
a form of variable consideration? ................................... 2221
9 IFRS 15 – LICENCES OF INTELLECTUAL PROPERTY .............................. 222
2
9.1
Identifying performance obligations in a licensing arrangement ............. 2223
9.1.1
Licences of intellectual property that are distinct ...................... 2224
9.1.2
Licences of intellectual property that are not distinct ............... 2226
9.1.3 Contractual
restrictions
....................................................................
2226
9.1.4
Guarantees to defend or maintain a patent .................................. 2228
9.1.5
Implementation questions on identifying performance
obligations in a licensing arrangement .......................................... 2228
9.1.5.A
Accounting for modifications to licences of
intellectual property ..................................................... 2228
9.2
Determining the nature of the entity’s promise in granting a licence ............ 2229
9.2.1
Applying the licensing application guidance to a single
(bundled) performance obligation that includes a licence
of intellectual property ..................................................................... 2232
Revenue
1967
9.3
Transfer of control of licensed intellectual property ................................. 2234
9.3.1
Right to access .................................................................................... 2234
9.3.1.A
Is a licence that provides a right to access
intellectual property a series of distinct goods
or services that would be accounted for as a
single performance obligation? .................................. 2235
9.3.2
Right to use ......................................................................................... 2236
9.3.3
Use and benefit requirement ............................................................ 2237
9.4
Licence renewals ................................................................................................ 2237
9.5
Sales-based or usage-based royalties on licences of intellectual
property ................................................................................................................ 2238
9.5.1
Recognition of royalties for a licence that provides a right
to access intellectual property ......................................................... 2241
9.5.2
Implementation questions on the sales-based or usage-
based royalty recognition constraint ............................................. 2243
9.5.2.A
Can the recognition constraint for sales-based
or usage-based royalties be applied to royalties
that are paid in consideration for sales of
intellectual property (rather than just licences
of intellectual property)? ............................................. 2243
9.5.2.B
If a contract for a licence of intellectual
property includes payments with fixed
amounts (e.g. milestone payments) that are
determined by reference to sales-based or
usage-based thresholds, would the royalty
recognition constraint need to be applied? ............. 2244
9.5.2.C
Can an entity recognise revenue for sales-
based or usage-based royalties for licences of
intellectual property on a lag if actual sales or
usage data is not available at the end of a
reporting period? ........................................................... 2244
9.5.2.D
Recognition of royalties with minimum
guarantees promised in exchange for a
licence of intellectual property that is
satisfied at a point in time ......................................... 2244
9.5.2.E
Recognition of royalties with minimum
guarantees promised in exchange for a licence
of intellectual property that is satisfied over
time .................................................................................. 2245
9.5.2.F
Application of the royalty recognition
constraint for sales-based or usage-based
royalties when an entity does not own the
intellectual property or control the intellectual
property as a principal in the arrangement ............. 2248
1968 Chapter 28
9.5.2.G
Can entities recognise sales-based or usage-
based royalties before the sale or usage of the
intellectual property occurs if they have
historical information that is highly predictive
of future royalty amounts? .......................................... 2249
10 IFRS 15 – OTHER MEASUREMENT AND RECOGNITION TOPICS ............ 2249
10.1 Warranties ........................................................................................................... 2249
10.1.1
Determining whether a warranty is an assurance-type or
service-type warranty ....................................................................... 2250
10.1.1.A
Evaluating whether a product warranty is a
service-type warranty (i.e. a performance
obligation) when it is not separately priced ............ 2252
10.1.1.B
Should repairs provided outside the warranty
period be accounted for as a service-type
warranty? ........................................................................ 2252
10.1.1.C
Customer’s return of a defective item in
exchange for compensation: right of return
versus assurance-type warranty ................................ 2253
10.1.2
Service-type warranties ................................................................... 2253
10.1.3 Assurance-type
warranties
..............................................................
2254
10.1.4
Contracts that contain both assurance and service-type
warranties ............................................................................................ 2255
10.2 Onerous contracts .............................................................................................. 2257
10.2.1
Implementation questions on onerous contracts ........................ 2258
10.2.1.A
Accounting for an onerous revenue contract
when the contract includes more than one
performance obligation that is satisfied over
time consecutively ........................................................ 2258
10.3 Contract costs ..................................................................................................... 2259
10.3.1
Costs to obtain a contract ................................................................ 2259
10.3.1.A
Does the timing of commission payments
affect whether they are incremental costs? ............. 2263
10.3.1.B
Commission payments subject to a threshold ........ 2264
10.3.1.C
Would an entity capitalise commissions paid
on contract modifications? .......................................... 2264
10.3.1.D
Would fringe benefits on commiss
ion
payments be included in the capitalised
amounts? ......................................................................... 2265
10.3.1.E
Must an entity apply the practical expedient to
expense contract acquisition costs to all of its
qualifying contracts across the entity or can it
apply the practical expedient to individual
contracts? ........................................................................ 2265
Revenue
1969
10.3.1.F
How would an entity account for capitalised
commissions upon a modification of the
contract that is treated as the termination of an
existing contract and the creation of a new
contract? ......................................................................... 2265
10.3.2 Costs to fulfil a contract ................................................................... 2265
10.3.2.A
Can an entity defer costs of a transferred good
or service that would otherwise generate an
upfront loss because variable consideration is
fully or partially constrained? ..................................... 2269
10.3.2.B
Accounting for fulfilment costs incurred prior
to the contract establishment date that are
outside the scope of another standard ..................... 2270
10.3.2.C Learning
curve
costs
....................................................
2270
10.3.2.D
Accounting for pre-contract or setup costs .............. 2271
10.3.2.E Capitalisation
of
mobilisation costs as costs to
fulfil a contract with a customer under IFRS 15 ...... 2271
10.3.2.F Accounting
for
loss leader contracts .......................... 2273
10.3.3 Amortisation of capitalised contract costs .................................... 2273
10.3.3.A
Determining whether a commission on a
renewal contract is commensurate with the
commission on the initial contract ............................ 2274
10.3.3.B
Determining the amortisation period of an
asset recognised for the incremental costs of
obtaining a contract with a customer ........................ 2275
10.3.3.C
Can an entity attribute the capitalised contract
costs to the individual performance obligations
in the contract to determine the appropriate
amortisation period? ..................................................... 2276
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 388