Revenue – ifrs 15 handbook

Example 13 – Wireless service contract with rollover minutes
Telco N enters into a two-year wireless contract with Customer C for prepaid 
voice services. The voice plan allows C to use 600 minutes each month for 
incoming and outgoing calls. After the 600 minutes are used, the handset can 
no longer be used to make or receive calls during that month. If C does not 
use all of the minutes, then C is able to roll over the unused minutes to the 
subsequent month. For the purposes of this example, breakage is ignored.
N concludes that C simultaneously receives and consumes the benefits of the 
minutes and therefore the performance obligation is satisfied over time. Due 
to C’s ability to roll over the unused minutes each month, progress towards 
complete satisfaction of the performance obligation is measured based on the 
number of minutes used each month. 
Any minutes that are unused at the end of each month will be accounted for 
as a contract liability because C pays in advance for the following month’s 
600 minutes.
5.3.2 
Limitations on applying the units-of-delivery or units-of-
production methods
IFRS 15.B15
An output method may not provide a faithful depiction of performance if the method 
selected fails to measure some of the goods or services for which control has 
transferred to the customer.
For example, if at the reporting date an entity’s performance has produced work 
in progress or finished goods that are controlled by the customer, then using an 
output method based on units produced or units delivered would distort the entity’s 
performance. This is because it would not recognise revenue for the assets that are 
created before delivery or before production is complete but that are controlled by 
the customer.

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140 | Revenue – IFRS 15 handbook