Revenue – ifrs 15 handbook

Example 8 – Automotive: Collaborative agreement
Automotive Supplier S enters into an arrangement with Carmaker D to develop 
a new technology for D’s cars. Both S and D agree to participate equally in the 
costs and results of the engineering and development activities. Under the 
arrangement, S will also produce 100 units of the part developed for payment 
of 10,000. Because the parties are active participants and share in the risks and 
rewards of the engineering and development activities – i.e. the technology 
– part of the contract related to the engineering and development could be a 
collaborative arrangement. However, there is also a revenue contract to produce 
a series of parts within the overall agreement, which is accounted for under the 
revenue standard.
6.4 
Portfolio approach
IFRS 15.4
The standard is generally applied to an individual contract with a customer. 
However, as a practical expedient an entity may apply the revenue model to a 
portfolio of contracts with similar characteristics if the entity reasonably expects 
that the financial statement effects of applying the revenue standard to the 
individual contracts within that portfolio would not differ materially.
Example 9 – Portfolio approach applied to costs
In April 2019, Cable Store C sold 100 cable television contracts. C employs 
several sales agents who receive a bonus of 10 for each contract that they 
obtain. C determines that each bonus constitutes a cost of obtaining a contract 
(see 
Section 7.1
) and should be capitalised and amortised over the life of that 
underlying contract and any related anticipated renewal (see 
Section 7.3
). 
C determines that the portfolio approach is appropriate because the costs are 
all related to obtaining a contract and the characteristics of the contracts are 
similar. The amortisation period for the asset recognised related to these costs 
is expected to be similar for the 100 contracts (see 
Section 7.3
). Additionally, 
C documents that the portfolio approach does not materially differ from the 
contract-by-contract approach. Instead of recording and monitoring 100 assets 
of 10 each, C records a portfolio asset of 1,000 for the month of April 2019

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172 | Revenue – IFRS 15 handbook