Revenue – ifrs 15 handbook

Repairs outside the warranty period as a customary practice
IFRS 15.B28
An entity may have a customary business practice of providing repairs outside 
the warranty period – i.e. an ‘implied warranty’. In some cases, it may not be 
clear if the repairs provided during the implied warranty period are an assurance- 
or service-type warranty. 
For example, if an entity determines that the repairs made during the implied 
warranty period generally involve correcting defects that existed at the time of 
sale, then the repairs could be an assurance-type warranty. Conversely, if the 
entity determines that the repairs made during the implied warranty period 
provide a service to the customer beyond fixing defects that existed at the time 
of sale, then the repairs could be a service-type warranty. 
An entity considers all facts and circumstances in making an assessment of 
whether an implied warranty is an assurance- or service-type warranty. 
An ‘extended warranty’ may be a service-type warranty or an 
assurance-type warranty
A warranty that is marketed as being an ‘extended warranty’ may be a service-
type warranty, but the facts will need to be evaluated to determine whether 
it provides service beyond the assurance that the product meets the agreed 
specifications. The mere labelling of a warranty as ‘extended’ or ‘enhanced’ is 
not determinative.
An entity considers all facts and circumstances and the factors included in 
the standard in making that determination. This includes, but is not limited to, 
considering the length of the coverage period.
10.3 
Principal vs agent considerations
Overview
When another party is involved in providing goods or services to a customer, an 
entity evaluates the nature of its promise to the customer. If an entity obtains 
control of another party’s goods or services before transferring control to the 
customer, then the entity’s promise is to provide the goods or services itself. 
Therefore, the entity is acting as a principal.
However, if the entity does not control the good or service before it is 
transferred to the customer, then the entity is acting as an agent and arranges 
for that good or service to be provided by another party. 
An entity identifies each specified good or service to be transferred to the 
customer and determines whether it is a principal or agent for each one. An 
entity may be a principal for some goods and services and an agent for others in 
a contract to transfer multiple goods or services. 

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10 Other application issues | 245
10.3 Principal vs agent considerations
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