Revenue – ifrs 15 handbook

Does the consideration payable to a customer (or to the customer’s
customer) represent a payment for a distinct good or service?
Yes
No

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82 | Revenue – IFRS 15 handbook
Example 27 – Payments to customers: Reduction in the transaction 
price
IFRS 15.IE160–IE162
Consumer Goods Manufacturer M enters into a one-year contract with 
Retailer R to sell goods. R commits to buying at least 1,500 worth of the 
products during the year. M also makes a non-refundable payment of 15 to R at 
contract inception to compensate R for the changes that it needs to make to its 
shelving to accommodate M’s products.
M concludes that the payment to R is not in exchange for a distinct good 
or service, because M does not obtain control of the rights to the shelves. 
Consequently, M determines that the payment of 15 is a reduction in the 
transaction price. M accounts for the consideration paid as a reduction in the 
transaction price when it recognises revenue for the transfer of the goods.
Example 28 – Payments to customers: Variable consideration
Company C contracts with Retailer X and delivers goods on 15 December Year 1. 
On 20 January Year 2, C offers coupons in a newspaper to encourage retail sales 
of the goods sold to X. C agrees to reimburse X for coupons redeemed. 
C has offered similar coupons in previous years.
C would probably determine that the transaction price for the goods sold on 
15 December Year 1 included variable consideration, given its history of offering 
coupons.
Conversely, if C had not offered coupons in prior years and did not expect to 
offer any coupons at contract inception, then it would recognise the amount 
payable to X as an adjustment to revenue when it communicated to X its 
intention to reimburse X for any redeemed coupons.