Revenue – ifrs 15 handbook

 
Additional application examples
Example 11 – Cost-to-cost measure of progress: Stand-ready 
maintenance contract
ABC Corp enters into a maintenance contract with Truck Company T for one 
year. ABC provides maintenance services as needed or at specified intervals 
for the fleet of trucks. ABC concludes that the nature of its performance 
obligation is to stand ready to provide the maintenance services and that the 
performance obligation is satisfied over time because T simultaneously receives 
and consumes the benefits from the assurance that ABC is available when and 
if needed. 
Although ABC concludes that its performance obligation is to stand ready 
to maintain or service the trucks at any point during the annual period, the 
maintenance services do not necessarily occur evenly throughout the year. 
Therefore, ABC selects a measure of progress that more closely aligns with its 
actual efforts and recognises revenue on an input-based measure that reflects 
its performance – e.g. cost-to-cost or labour hours incurred.
Example 12 – Telco: Monthly prepaid wireless contract
Telco M enters into a monthly prepaid contract with wireless Customer B for 
200 minutes per month of voice services. B pays 30 per month in advance. 
B can use the minutes to make calls at any time during the month. Once the 
200 minutes are used, the handset remains connected to the network and 
can accept calls. That is, incoming calls are not included in the 200 minutes 
per month. 

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5 Step 5 – Recognise revenue when or as the entity satisfies a performance obligation | 139
5.3 Measuring progress towards complete satisfaction of a performance obligation
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M first concludes that B simultaneously receives and consumes the benefits 
from the service as it is provided and therefore the performance obligation is 
satisfied over time. Furthermore, M determines that the nature of its promise 
is to provide network services to B throughout the month because incoming 
calls are not included in the 200 minutes. Consequently, the number of minutes 
used does not appear to appropriately depict the satisfaction of that promise. 
Instead, the more appropriate measure of progress appears to be time elapsed. 
M therefore recognises revenue of 30 evenly throughout the month.