Revenue – ifrs 15 handbook

Criterion 1
A customer simultaneously receives and consumes the benefits of the entity’s 
performance as the entity performs and another entity would not need to 
substantially reperform the work that the entity has completed to date.
When determining whether another party would not need to substantially 
reperform, the entity also presumes that another party would not have the benefit 
of any asset that the entity presently controls and would continue to control if that 
other party took over the performance obligation.
IFRS 15.B5, IU 03-18
Criterion 2
In evaluating whether a customer controls an asset as it is created or enhanced, an 
entity considers the guidance on control in the standard, including the indicators of 
the transfer of control (see 
Section 5.4
).
In evaluating Criterion 2 for sales of real estate, an entity focuses on the real estate 
unit itself, rather than on the right to sell or pledge a right to obtain the real estate in 
the future. This is because the latter does not provide evidence of control of the real 
estate unit.
IFRS 15.36
Criterion 3
In assessing whether an asset has an alternative use, at contract inception an entity 
considers its ability to readily direct that asset in its completed state for another 
use – e.g. selling it to a different customer.
IFRS 15.B4, B6–B8, BC127
Applying Criteria 1 and 3
Potential contractual restrictions or practical limitations may prevent the entity from 
transferring the remaining performance obligation to another entity (Criterion 1) or 
directing the asset for another use (Criterion 3). The standard provides guidance on 
whether these facts or possible termination affect the assessment of those criteria. 
It provides the following guidance on the assumptions that an entity should make 
when applying Criteria 1 and 3.