Revenue – ifrs 15 handbook

 
Additional application examples
Example 11A – Presentation of amortisation of contract costs: 
Expenses by function
Company X presents its expenses by function. During the year, X has 
recognised amortisation of: 
– a commission to sales staff of 20: i.e. costs to obtain a contract; and 
– initial third party testing fees of 50: i.e. costs to fulfil a contract. 
X includes the commission to sales staff in selling and distribution expenses, 
and the initial third party testing fees in cost of sales.

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11 Presentation | 315
11.2 Statements of profit or loss and cash flows
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Example 11B – Presentation of amortisation of contract costs: 
Expenses by nature
Modifying Example 11A, Company X presents its expenses by nature. Based on 
its analysis, X determines that the commission to sales staff is similar in nature 
to other staff costs and therefore presents the amortisation of the commission 
as part of employee expenses. Conversely, if X determined that the commission 
were similar in nature to an investment in a customer relationship, then it may 
present amortisation of the commission together with amortisation of other 
non-current assets.
X determines that the initial third party testing fees are similar in nature to other 
contract fulfilment costs and presents them in the same line as those other 
contract fulfilment costs.

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© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
316 | Revenue – IFRS 15 handbook
12 Disclosure
Overview
The standard contains both qualitative and quantitative disclosure requirements 
for annual and interim periods.