A cornerstone of the IFRS 15 model is the fact that revenue is recognised upon satisfaction of ‘distinct’ performance obligations rather than the contract as a whole. A promised good or service is ‘distinct’ if both:

  • the customer benefits from the item on its own or along with other readily available resources
  • it is ‘separately identifiable’ (eg the retailer does not provide a significant service integrating, modifying, or customising the various performance obligations).

Under IFRS 15, performance obligations are identified at contract inception and may be stated in the contract, implied by established practice, or otherwise. With the more detailed guidance the new standard provides, entities should be alert for the possibility that additional performance obligations may be identified within existing contracts and this may alter the timing of revenue recognition


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