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ARTICLE · 25 MAY 2016

Revenue Recognition For Technology Companies For Multiple-Element Arrangements Under IFRS 15

Collins Barrow National Incorporated
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IFRS 15 sets out requirements for recognizing revenue that apply to all contracts with customers and replaces the myriad of current revenue standards.

CanadaAccounting and Audit
Nicole Liesemer
Nicole Liesemer
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Background and Effective Date

The International Accounting Standards Board (IASB) has published a new standard, IFRS 15 Revenue from Contracts with Customers (IFRS 15). IFRS 15 sets out requirements for recognizing revenue that apply to all contracts with customers and replaces the myriad of current revenue standards.

This new standard is effective for annual reporting periods beginning on or after January 1, 2018.

Overview

The core principle in IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To recognize revenue, a company would apply the following five steps:

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