Page 48 - SBR Integrated Workbook STUDENT S18-J19

Chapter 4

1.2 Step 1: Identify the contract

IFRS 15 Revenue from Contracts with Customers says that a contract is an
agreement between two parties that creates rights and obligations.

An entity can only account for revenue from a contract if it meets the following
criteria:

 the parties have approved the contract and each party’s rights can be identified

 payment terms can be identified

 the contract has commercial substance

 it is probable that the selling entity will receive consideration.

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