Revenue – ifrs 15 handbook

Rebates, credits and refunds generally preclude application of the 
practical expedient
The presence of variable pricing created by expected refunds, rebates, credits 
or tiered pricing generally precludes use of the as-invoiced practical expedient.
This is because the amount that the entity has a right to invoice will not, at least 
until the customer achieves the lowest pricing tier, generally reflect the amount 
to which the entity expects to be entitled. 
The entity also cannot recognise the invoiced amount as revenue when there 
is an expectation of later price concessions, which means that the invoiced 
amounts do not reflect the value to the customer of the services provided.
 
Additional application examples
Example 17A – Applying ‘as-invoiced’ practical expedient: Change 
in rates linked to CPI
Law Firm L enters into a contract with Customer M to provide services related 
to a legal case that is expected to take three years to resolve. Fees for the 
services are based on hourly rates: starting at 500 per hour for Year 1 and then 
adjusting each year by an amount equal to the change in the CPI. 
Even though the rate per hour will change in Years 2 and 3, L concludes that 
it can still apply the as-invoiced practical expedient because the change in 
fee results from cost of service increases commensurate with local inflation. 
As a result, L concludes that the fees that it will receive during each period 
appropriately reflect the value to the customer of the entity’s performance of 
providing legal services in that period.

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146 | Revenue – IFRS 15 handbook
Example 17B – Applying ‘as-invoiced’ practical expedient: Change