Revenue – ifrs 15 handbook

Example 21 – Transaction processor: Processing arrangement
Transaction Processor P enters into a 10-year transaction processing 
arrangement with Customer C under which P will provide continuous access 
to its system and process all transactions on behalf of C. C is charged a fee 
for each transaction processed but the number of transactions processed is 
outside the control of C. 
P concludes that its promise is to stand ready to process transactions on 
behalf of C as they arise over the contract period. P concludes that each day of 
service is substantially the same because the nature of the promise (to provide 
continuous access to the platform) is the same for each increment. 
P concludes that each day’s service is considered distinct because C can benefit 
from accessing its system each day and each day is separately identifiable – i.e. 
one service period does not significantly affect, modify or customise another. 
However, P applies the series guidance and concludes that its contract with 
C is a single performance obligation to provide transaction processing services 
for 10 years because revenue will be recognised over time as C consumes the 
benefit of the service as it is provided and the same measure of progress will 
be applied for each distinct increment because the promise is the same for 
each increment.

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46 | Revenue – IFRS 15 handbook
3 
Step 3 – Determine the 
transaction price
Overview
IFRS 15.47
The ‘transaction price’ is the amount of consideration to which an entity expects 
to be entitled in exchange for transferring goods or services to a customer, 
excluding amounts collected on behalf of third parties – e.g. certain sales taxes. 
To determine this amount, an entity considers multiple factors.
IFRS 15.49
An entity estimates the transaction price at contract inception, including any 
variable consideration, and updates the estimate each reporting period for any 
changes in circumstances. When determining the transaction price, an entity 
assumes that the goods or services will be transferred to the customer based 
on the terms of the existing contract and does not take into consideration the 
possibility of a contract being cancelled, renewed or modified.
In determining the transaction price, an entity considers the following components.
IFRS 15.48