Revenue Recognition - Project objective:
Revenue is a crucial number to users of the financial statements in assessing a company's performance and prospects. The objective of this project was to clarify the principles for recognising revenue from contracts with customers. It applies to all contracts with customers except leases, financial instruments and insurance contracts. The main objective of this project are as follows:
To remove inconsistencies and weaknesses in existing revenue recognition standards by providing clear principles for revenue recognition in a robust framework.
To provide a single revenue recognition model which will improve comparability over a range of industries, companies and geographical boundaries.
To simplify the preparation of financial statements by reducing the number of requirements to which preparers must refer.
IFRS 15 - Revenue from Contract with Customers: Amendments to the Revenue Standard. 12 April 2016, International Accounting Standards Board The amendments clarify how to:
identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract;
determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and
determine whether the revenue from granting a license should be recognised at a point in time or over time. The amendments have the same effective date as the Standard: 1 January 2018.