Page 155 - FR Integrated Workbook 2018-19

Revenue

Variable consideration

IFRS 15 says that if a contract includes variable consideration (e.g. a bonus or a
penalty) then the entity must estimate the amount it expects to receive, but only
include such value within the transaction price if the likelihood of payment is highly
probable.

Financing

If there is a significant financing component, such as when the customer pays more
than a year after receiving the goods or services, then the consideration receivable
needs to be discounted to present value using the rate at which the customer
borrows money.

Non-cash consideration

Any non-cash consideration is measured at fair value.

Consideration payable to a customer

If consideration is paid to a customer in exchange for a distinct good or service, then
it should be accounted for as a separate purchase transaction.

Assuming that the consideration paid to a customer is not in exchange for a distinct
good or service, an entity should account for it as a reduction in the transaction price.

Illustrations and further practice

See Illustrations 1 and 2 in the Study Text.

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