Revenue – ifrs 15 handbook

party while the goods are in transit. The fact that the seller transfers its risk 
of loss to another party (i.e. the third party shipping company or insurance 
company) does not mean that the customer has the ability to direct the use 
or obtain substantially all of the benefits from the goods or services. An entity 
needs to consider this when assessing at which point in time control transfers 
to the customer. 
If the entity concludes that transfer of control has occurred when the product 
is shipped, then it also considers whether its business practices give rise to 
a separate performance obligation in addition to the performance obligation 
to transfer the product itself – i.e. a stand-ready obligation to cover the risk of 
loss if goods are damaged in transit. If a separate performance obligation is 
identified, then only the revenue allocated to the sale of the goods is recognised 
at the shipping date.
Indirect channels and sell-in vs sell-through
Many entities sell through distributors and resellers. These transactions will 
require judgement to determine if the transfer of control occurs on delivery to 
the intermediary (sell-in model) or when the good is resold to the end customer 
(sell-through model). Entities need to consider the guidance on consignment 
sales (see 
Section 5.6
) and variable consideration (see 
Section 3.1
) to determine 
which model is appropriate.
5.5
Repurchase agreements
Overview
An entity has executed a repurchase agreement if it sells an asset to a customer 
and promises, or has the option, to repurchase it. If the repurchase agreement 
meets the definition of a financial instrument, then it is outside the scope of the 
standard. If not, then the repurchase agreement is in the scope of the standard 
and the accounting for it depends on its type – e.g. a forward, call option or put 
option – and on the repurchase price.
IFRS 15.10, B64
The option to repurchase the asset may be in the same contract or in another 
contract. A contract creates enforceable rights and obligations and can be written, 
oral or implied by an entity’s customary business practices (see 
Section 1.1
).
The repurchased asset may be the asset that was originally sold to the customer, 
an asset that is substantially the same as that asset, or another asset of which the 
asset that was originally sold is a component.

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152 | Revenue – IFRS 15 handbook
IFRS 15.BC423
If an entity does not have a contractual right to repurchase a good, but decides to do 
so after transferring control of that good to a customer, then this does not constitute 
a repurchase arrangement. This is because the customer is not obliged to resell that 
good to the entity under the original contract.
IFRS 15.B66–B67