Revenue – ifrs 15 handbook

Receivable vs contract asset – Refund obligations do not impact 
the analysis
IFRS 15.BC326
An entity’s possible obligation to refund consideration to a customer in 
the future does not affect the entity’s present right to the gross amount of 
consideration. When a right of return exists, an entity recognises a receivable 
and a separate refund liability for the amount of the estimated refund (see 
Section 10.1
).
Milestone payments under over-time contracts
Under some contracts for which revenue is recognised over time, an entity 
may have a right to bill the customer when it achieves a specific stage of the 
project. These payments are often referred to as ‘milestone payments’. It 
appears that in these cases, an entity should recognise a receivable when the 
milestone payment is due if it is not conditional on the completion of the entire 
performance obligation. For an illustration, see 
Example 9B
 in this chapter.

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11 Presentation | 311
11.1 Statement of financial position
| 
Recognising a receivable when the consideration is variable
IFRS 15.108, IE205–IE208, IASBU 12–15
An entity may have a right to receive partially or wholly variable consideration for 
a previously transferred good or service. It appears that in these cases the entity 
should recognise a receivable to the extent that it has an unconditional right to 
a fixed amount of consideration. For variable amounts, the timing of recognition 
of a receivable depends on the nature of variability. We believe that the following 
is one acceptable approach to accounting for variable amounts. 
– 
Variable amounts subject to a refund:
Recognise a receivable when the entity 
has a present right to payment, even if the payment may be subject to a 
refund in the future. 
– 
Other variable consideration in the scope of the revenue standard:
Recognise 
a receivable only after the amounts become fixed. This is because the 
payment for these amounts depends on conditions other than the passage 
of time (e.g. possible actions by the entity, customers or third parties – see 
Section 3.1
).
– 
Variable consideration not in the scope of the revenue standard:
This 
variability does not prevent recognition of receivables. Instead, it is 
considered to be a part of the contractual terms of the receivable recognised 
and may impact the classification and measurement of the receivable under 
the financial instruments standard (e.g. changes in the market price of a 
commodity that has been delivered – see 
Section 3.1
).
For an illustration, see 
Example 10
in this chapter.