Revenue – ifrs 15 handbook

Example 8 – Applying the over-time criteria: No enforceable right to 
payment
Bicycle Manufacturer B enters into a contract with Customer C to build 1,000 
bicycles in accordance with C’s specifications and branding. Under the contract, 
C is required to pay B on delivery of the bicycles. 
The contract does not include any termination or default clauses.
The extent of customisation of the bicycles means that they do not have an 
alternative use; therefore, B assesses whether it has an enforceable right to 
payment under Criterion 3.
– There are no clauses in the contract that give B a right to payment for its 
performance completed to date.
– There is no local legislation or legal precedent that would indicate that B has a 
right to payment for its performance completed to date.
B therefore determines that it does not have an enforceable right to payment 
under Criterion 3 and therefore recognises revenue at the point in time when 
control of the bicycles transfers to C (see 
Section 5.4
).
5.3
Measuring progress towards complete 
satisfaction of a performance obligation
5.3.1 
Selecting a method to measure progress
IFRS 15.39–43, B15–B19
For each performance obligation that is satisfied over time, an entity applies a single 
method of measuring progress towards complete satisfaction of the obligation. 
The objective is to depict the transfer of control of the goods or services to the 
customer. To do this, an entity selects an appropriate output or input method. It 
then applies that method consistently to similar performance obligations and in 
similar circumstances.
Method
Description
Examples
Output
Based on direct 
measurements of the value 
to the customer of goods or 
services transferred to date, 
relative to the remaining 
goods or services promised 
under the contract
– Surveys of performance to 
date
– Appraisals of results 
achieved
– Milestones reached
– Time elapsed

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
132 | Revenue – IFRS 15 handbook