In its October 2017 statement on enforcement priorities, the
European Securities and Markets Authority (ESMA) drew attention to
the potentially significant impacts that IFRS 15 may have on timing
and revenue recognition. IFRS 15 is set to replace IAS 18
Revenue and IAS 11 Construction Contracts. Most
companies will be affected by it, with the industries of telecom,
engineering, real estate, construction, and software perhaps facing
the biggest change. In the statement, ESMA singles out certain
areas that are important depending on the company's business
model and current practice. Read on for further info on these
areas.
Non-refundable upfront fees
The regulator emphasises that, under the new IFRS 15
requirements, the identification of performance obligations (see
paragraphs IFRS 15.22-30) could lead to differences from current
practices, particularly regarding non-refundable upfront fees. ESMA
stresses the use of paragraphs B48-B51 to assess if the
non-refundable
