Get 15 July, 2009 International Accounting Standards Board 30 Cannon ...

IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with earlier application permitted. IFRS 15 establishes the principles that an entity applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer.

The Financial Accounting Standards Board (FASB) provides free online access to the Accounting Standards Codification and is the only authoritative source for US GAAP.

The International Accounting Standards Board (IASB) is an independent, private-sector body that develops and approves International Financial Reporting Standards (IFRSs).

Under ASC 606 (GAAP), entities can recognize the incremental costs of obtaining a contract as an asset if they expect to recover those costs. Conversely, IFRS 15 restricts capitalization of costs to only those that are incremental and would not have been incurred if the contract had not been obtained.

The core principle of IFRS 15 is that revenue is recognised when the goods or services are transferred to the customer, at the transaction price. Revenue is recognised in ance with that core principle by applying a 5-step model as shown below.

The five revenue recognition steps of IFRS 15 – and how to apply them. Identify the contract. Identify separate performance obligations. Determine the transaction price. Allocate transaction price to performance obligations. Recognise revenue when each performance obligation is satisfied.

The objective of IFRS 15 is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer.

IFRS 15 contains specific, and more precise, guidance to be applied meaning that for many entities, the timing and profile of revenue recognition will change. In some areas the changes may be very significant and will require careful planning, both for reporting and the wider commercial effects.