Page 49 - SBR Integrated Workbook STUDENT S18-J19

Revenue

1.3 Step 2: Identify the performance obligations

IFRS 15 says that the distinct performance obligations within a contract must be
identified.

Performance obligations are promises to transfer distinct goods or
services to a customer.

Contract

Performance Performance

obligation 1 obligation 2

If another party is involved in providing a good or service, the entity must determine
the nature of its performance obligation. This might be:

 providing the good or service itself – the entity is the principal

 arranging for the goods and services to be provided by another party – the
entity is the agent.

An entity is the principal if it controls the good or service before it is transferred to the
buyer.

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