Revenue – ifrs 15 handbook

Distinct goods or services in a series that are treated as a single 
performance obligation are considered separately
IFRS 15.BC115
Sometimes an entity needs to apply the contract modification guidance 
to a series of distinct goods or services that is accounted for as a single 
performance obligation. In this case, the entity considers the distinct goods or 
services in the contract, rather than the single performance obligation.
Interaction of new contracts with pre-existing contracts needs to 
be considered
Any agreement with a customer involving a pre-existing contract with an 
unfulfilled performance obligation may need to be evaluated to determine 
whether it is a modification of the pre-existing contract.
Accounting for contract asset on termination of an existing 
contract and creation of a new one
IFRS 15.107
In some cases, an entity may have a contract asset at the time when a contract 
is modified. If a modification of the contract results in a termination of the 
existing contract and creation of a new one, then the entity does not write off 
the existing contract asset but carries it forward to the new contract, subject to 
impairment. This is because a write-off of the contract asset would result in a 
reversal of previously recognised revenue and would be inconsistent with the 
prospective accounting for the modification.

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8 Contract modifications | 205
8.2 Accounting for a contract modification
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Additional application example
Example 6 – Contract modification: Additional goods or services: 
Car supply agreement
On 1 January, Carmaker G enters into a framework agreement with Automotive 
Supplier S to perform engineering and design (E&D) activities and produce