Revenue – ifrs 15 handbook

Right of first refusal 
IFRS 15.B66, BC423
A seller may retain a right of a first refusal for future sale of the purchased asset 
by the customer. This allows the seller to repurchase the asset at the same price 
as a third party agrees to pay to the customer for the sale of the asset. 
This right is not a call or a put option because it does not prevent the customer 
from controlling the asset. Accordingly, it does not generally constitute a 
repurchase agreement and therefore does not affect revenue recognition by the 
seller. Additionally, the customer has no right to return the asset to the seller so 
the returns are not estimated.
5.6
Consignment arrangements
IFRS 15.B77
An entity may deliver goods to another party but retain control of the goods – e.g. 
it may deliver a product to a dealer or distributor for sale to an end customer. These 
types of arrangements are called ‘consignment arrangements’ and do not allow the 
entity to recognise revenue on delivery of the products to the intermediary.
IFRS 15.B78
The standard provides indicators that an arrangement is a consignment 
arrangement as follows.
Indicators of a consignment arrangement
While the entity retains
control of the product...
When is revenue recognised?
When control transfers to the
intermediary or end customer...
Performance obligation is not satisfied
and revenue is not recognised
Performance obligation is satisfied
and revenue is recognised
The entity controls
the product until a
specified event occurs
(e.g. the sale of
the product to a
customer of the dealer)
or until a specified
period expires
The entity is able
to require the return of
the product or transfer
the product to a third
party – e.g. another
dealer
The dealer does not
have an unconditional
obligation to pay for
the products, although
it might be required to
pay a deposit

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5.6 Consignment arrangements
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