Revenue – ifrs 15 handbook

Criterion 1
Capable of being distinct
– R can benefit from the handset either on its own (i.e. 
because the handset has stand-alone functionalities 
and can be resold for more than scrap value and has 
substantive, although diminished, functionality that is 
separate from T’s network) or together with the wireless 
services, which are readily available to R because T sells 
those services separately.
– R can benefit from the wireless services in conjunction 
with readily available resources – i.e. either the handset is 
already delivered at the time of contract set-up, it could be 
purchased from alternative retail vendors or the wireless 
service could be used with a different handset.

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2 Step 2 – Identify the performance obligations in the contract | 27
2.1 Distinct goods or services
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Criterion 2
Distinct within the context of the contract
– The handset and the wireless services are separable in 
this contract because they are not inputs into a single 
asset (i.e. a combined output), which demonstrates that 
T is not providing a significant integration service.
– Neither the handset nor the wireless service significantly 
modifies or customises the other. 
– R could purchase the handset and the voice/data services 
from different parties (e.g. R could purchase the handset 
from a retailer), which provides evidence that the handset 
and voice/data services are not highly dependent on, or 
highly inter-related with, each other.
Applying the indicators will require judgement
The standard does not include a hierarchy or weighting of the indicators of 
whether a good or service is separately identifiable from other promised goods 
or services within the context of the contract. An entity evaluates the specific 
facts and circumstances of the contract to determine how much emphasis to 
place on each indicator. 
Certain indicators may provide more compelling evidence in the separability 
analysis than others in different scenarios or types of contracts. For example, 
factors such as the degree of customisation, complexity, customer’s motivation 
for purchasing goods or services, contractual restrictions and the functionality 
of individual goods or services may have differing effects on the distinct analysis 
for different types of contracts. 
In addition, the relative strength of an indicator, in light of the specific facts 
and circumstances of a contract, may lead an entity to conclude that two or 
more promised goods or services are not separable from each other within the 
context of the contract. This may occur even if the other two indicators might 
suggest separation.
To help an entity apply the indicators, the standard includes many examples 
illustrating their application. The following table summarises them.

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28 | Revenue – IFRS 15 handbook
IFRS 15.IE45–IE65A