Revenue – ifrs 15 handbook

Exemption from restating for contract modifications that occur 
before the start of the earliest period presented
This practical expedient essentially allows an entity to use hindsight when 
assessing the effect of a modification on a contract. However, it does not 
exempt an entity from applying other aspects of the requirements to a contract 
– e.g. identifying the performance obligations in the contract and measuring the 
progress towards complete satisfaction of those performance obligations.
13.2.4 
Practical expedient 4 – Disclosure exemption
IFRS 15.C5(d)
Under practical expedient 4, an entity need not disclose for reporting periods 
presented before the date of initial application:
– the amount of the transaction price allocated to the remaining performance 
obligations; nor 
– an explanation of when the entity expects to recognise that amount as revenue.
Example 8 – Applying practical expedient 4
Property Developer X has a contract with Customer C, to construct a building on 
C’s land for a fixed amount of 20 million. Construction starts on 1 January 2016 
and is expected to take five years to complete. X determines that it satisfies 
its performance obligation over time and that the cost-to-cost method best 
depicts performance.
IFRS 15.120
If X elects to apply the retrospective method including practical expedient 4, 
then its annual financial statements for the year ended 31 December 2018 are 
not required to comply with the remaining performance obligation disclosure 
requirements for the comparative periods presented (31 December 2017 and 
31 December 2016). 
Assume that the building is 80% complete on 31 December 2018. X provides 
the following disclosure.
Transaction price allocated to remaining performance obligations
At 31 December 2018, X has yet to recognise as revenue 4 million of the 
20 million transaction price for the construction of the building. X expects to 
recognise this amount evenly over the next two years in line with the planned 
schedule for completion of its construction.
Using the transition requirements of the standard, X has elected not 
to provide information on the transaction price allocated to remaining 
performance obligations at 31 December 2017 and 31 December 2016.

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13.3 Cumulative effect method
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