Revenue – ifrs 15 handbook

Scope of consideration payable to a customer is wider than 
payments made under the contract
Payments made to a customer that are not specified in the contract may still 
represent consideration payable to a customer. An entity needs to develop a 
process for evaluating whether any other payments made to a customer are 
consideration payable that requires further evaluation under the standard. 
The determination of how broadly payments within a distribution chain should 
be evaluated requires judgement. However, an entity need not always identify 
and assess all amounts ever paid to a customer to determine whether they 
represent consideration payable to a customer.
Consideration payable may include payments made outside a 
direct distribution chain
IFRS 15.70, BC92, BC255
Consideration payable to a customer includes amounts paid to a customer’s 
customer – i.e. amounts paid to end customers in a direct distribution chain. 
However, in some cases an entity may conclude that it is appropriate to apply the 
guidance more broadly – i.e. to amounts paid outside the direct distribution chain.
For example, Marketing Company M may market and incentivise the purchase 
of Merchant P’s products by providing coupons to P’s Buyer B. When B buys 
from P as a result of M’s actions, M earns revenue from P. B is not purchasing 
M’s services and is not in a direct distribution chain.
Service fee based on
of units sold by Merchant
number
P
Merchant P
(Principal)
Marketing
ompany
C
M
( gent)
a
Buyer B
P’
( s customer)
Products
Coupons
Depending on the facts and circumstances, M may conclude that both P 
and B are its customers, or it may conclude that only P is its customer. As a 
consequence, judgement will be needed to evaluate a specific fact pattern 
to determine whether a payment to a party outside a direct distribution chain 
should be treated as consideration payable to a customer and therefore as a 
reduction of revenue.

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3 Step 3 – Determine the transaction price | 85
3.4 Consideration payable to a customer
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