Revenue – ifrs 15 handbook

Specific anticipated contracts are considered in impairment test
The standard specifies that an asset is impaired if its carrying amount exceeds 
the remaining amount of consideration that an entity expects to receive, less 
the costs that relate directly to providing those goods or services that have not 
been recognised as expenses.
Under the standard, an entity considers specific anticipated contracts when 
capitalising contract costs. Consequently, the entity includes cash flows from 
both existing contracts and specific anticipated contracts when determining the 
consideration expected to be received in the contract costs impairment analysis. 
However, the entity excludes from the amount of consideration the portion that it 
does not expect to collect, based on an assessment of the customer’s credit risk.
Discounting may be relevant for long-term contracts
IAS 36
For certain long-term contracts that have a significant financing component, 
the estimated transaction price may be discounted. In this case, the standard 
does not prescribe whether to discount the estimated remaining contract costs 
when performing the impairment test, even though the contract cost asset 
is not presented on a discounted basis in the entity’s statement of financial 
position. Under IFRS, an entity discounts the contract costs for impairment 
test purposes consistently with the standard on impairment of assets, which 
requires it to take into account the time value of money when determining value 
in use.

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194 | Revenue – IFRS 15 handbook
8 
Contract modifications
Overview
A ‘contract modification’ occurs when the parties to a contract approve a 
change in its scope, price or both. The accounting for a contract modification 
depends on whether distinct goods or services are added to the arrangement 
and on the related pricing in the modified arrangement. This section discusses 
both identifying and accounting for a contract modification.