Revenue – ifrs 15 handbook

ratio
Price 
allocation
Equipment
10,000
N/A
10,000
10,000
65.0%
8,911
Maintenance 
Year 1
2,000
N/A
2,000
2,000
13.0%
1,782
Renewal 
option 1
1,000
90%
900
1,800
1
11.5%
1,577
Renewal 
option 2
1,000
81%
810
1,620
2
10.5%
1,440
Total
14,000
13,710
15,420
100.0%
13,710
Notes
1. 2,000 × 90%.
2. 2,000 × 81%.
In Year 1, ABC recognises 891,100 (8,911 × 100) when it transfers control of the 
equipment to the customer and 178,200 (1,782 × 100) as it satisfies the related 
maintenance performance obligation. The difference between the amount 
recognised as revenue and consideration received of 130,700 (1,200,000 - 
891,100 - 178,200) is recognised as a contract liability. The amounts allocated 
to the renewal options will be recognised as the performance obligations 
are satisfied.
If the actual number of renewals is different from what was expected, then 
ABC’s policy is to update the transaction price and recognise revenue with a 
cumulative catch-up adjustment.
10.4.3 
Customer loyalty programmes
 
Applying the option guidance to customer loyalty programmes
IFRS 15.B40
Customer loyalty programmes are often in the scope of the customer option 
guidance and the requirements discussed in 
10.4.1
 apply. A customer loyalty 
programme that provides a customer with a material right is accounted for as a 
separate performance obligation.
Under some loyalty programmes, points expire, whereas under others they do not. 
It appears that an entity may apply the breakage guidance (see 
Section 10.5
) to both 
types of programme to determine when to recognise revenue for points that are 
not expected to be exercised. This is because the points represent multiple material 
rights rather than a single right with a binary outcome.

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10.4 Customer options for additional goods or services
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