Revenue – ifrs 15 handbook

7.2 
Costs of fulfilling a contract
IFRS 15.95, BC308
If the costs incurred in fulfilling a contract with a customer are not in the scope of 
other guidance – e.g. inventory, intangibles or property, plant and equipment – then an 
entity recognises an asset only if the fulfilment costs meet the following criteria:
– they relate directly to an existing contract or specific anticipated contract;
– they generate or enhance resources of the entity that will be used to satisfy 
performance obligations in the future; and
– they are expected to be recovered.
IFRS 15.96, BC307
If the costs incurred to fulfil a contract are in the scope of other guidance, 
then the entity accounts for them using the other guidance. If other applicable 
guidance precludes capitalisation, then the costs cannot be capitalised under the 
revenue standard.

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
180 | Revenue – IFRS 15 handbook
No
Expense costs as they are incurred
No
Yes
Yes
Do they meet the criteria
to be capitalised as
fulfilment costs?
Capitalise costs
Apply that other guidance
Are the costs incurred in fulfilling
the contract in the scope of other
guidance?
IFRS 15.97–98
When costs are not in the scope of other guidance, an entity considers whether 
they are directly related to a contract or an anticipated contract. The following are 
examples of costs that are capitalised when the specified criteria are met and of 
costs that cannot be capitalised.
Direct costs that are 
eligible for capitalisation if