Revenue – ifrs 15 handbook

Remaining performance obligation disclosures may differ from 
backlog disclosures
IFRS 15.BC349
Some entities, including those with long-term contracts, publicly disclose 
bookings or backlogs (i.e. contracts received but incomplete or not yet started). 
Bookings are typically a metric defined by management to facilitate discussions 
with investors and, under some local regulations, ‘backlog’ may be subject to 
legal interpretation. 
The disclosure about remaining performance obligations is based on the 
determination of the transaction price for unsatisfied (or partially unsatisfied) 
performance obligations and therefore it may differ from the disclosure of 
bookings or backlog – e.g. because it does not include orders for which neither 
party has performed and each party has the unilateral right to terminate a wholly 
unperformed contract without compensating the other party.
Contract renewals are included only if they provide a material 
right
The standard requires passive and active renewals to be accounted for in the 
same way, because the customer is making the same economic decision. For 
example, a one-year service contract with an option to renew for an additional 
year at the end of the initial term is economically the same as a two-year service 
contract that allows the customer to cancel the contract at the end of the first 
year without penalty and avoid payment for the second year.
Contracts with passive or active renewals that do not give the customer a 
material right are not included in the disclosure of remaining performance 
obligations, but a one-year contract with a renewal period that is a material 
right is included to the extent of the material right. Similarly, a two-year contract 
that provides the customer with a cancellation provision after the first year is 
included in the disclosure of remaining performance obligations if the second 
year of the contract provides the customer with a material right.