Revenue – ifrs 15 handbook

10.4 
Customer options for additional goods or 
services
Overview
An entity accounts for a customer option to acquire additional goods or services 
as a performance obligation if the option provides the customer with a material 
right. The standard provides guidance on calculating the stand-alone selling 
price of a customer option when it is a material right. 
10.4.1 
General requirements
IFRS 15.B40
When an entity grants the customer an option to acquire additional goods or 
services, that option is a performance obligation under the contract if it provides 
a material right that the customer would not receive without entering into that 
contract.

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
264 | Revenue – IFRS 15 handbook
IFRS 15.B40–B41
The following flowchart helps analyse whether a customer option is a performance 
obligation.
Yes
No
The option may be a material right,
and if so then it gives rise to a
performance obligation
The option does not give rise to
a performance obligation
Yes
No
Does the option give the customer
the right to acquire additional goods
or services at a price that reflects the
stand-alone selling price for those
goods or services?
The entity grants the customer an option
to acquire additional goods or services
Could the customer obtain the
right to acquire the additional goods or
services without entering into the
sale agreement?
IFRS 15.B42
If the stand-alone selling price for a customer’s option to acquire additional goods 
or services that is a material right is not directly observable, then an entity will need 
to estimate it. This estimate reflects the discount that the customer would obtain 
when exercising the option, adjusted for:
– any discount that the customer would receive without exercising the option; and
– the likelihood that the option will be exercised.
IFRS 15.B40, B46
Revenue for material rights is recognised when the future goods or services are 
transferred or when the option expires. If the option is a single right with a binary 
outcome – i.e. it will either be exercised in full or expire unexercised – then there 
is nothing to recognise before the option is exercised or expires. Conversely, if the 
option represents multiple rights or does not expire, then it appears that an entity 
may apply the guidance on unexercised rights – i.e. breakage (see 
Section 10.5
).

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
10 Other application issues | 265
10.4 Customer options for additional goods or services
|