Revenue – ifrs 15 handbook

Total
105,000
100.0%
100,000
Notes
1. Each part is a separate performance obligation but for simplicity they are presented as a 
single item in this table. 
2. 500 parts × 200.
3. The stand-alone selling price for the material right is calculated as the expected volume of 
parts to be sold at a discount (200) × the discount of 50 (200 - 150) × 50% of the quantity 
required to receive future discounts (500 / 1,000).

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274 | Revenue – IFRS 15 handbook
Example 7 – Periodic price decreases in a framework agreement: 
No material right
Automotive Supplier Y enters into a three-year framework agreement with 
Carmaker T to supply highly complex parts. Each part is a distinct good that is 
transferred at a point in time.
Under the framework agreement, T is not obliged to purchase a minimum 
quantity of parts. The price per part set out in the framework agreement 
declines each year as follows, independently of the quantity of parts purchased.
– Year 1: 700 per part.
– Year 2: 660 per part.
– Year 3: 600 per part.
This declining unit price reflects the expected reduction in Y’s learning curve 
costs. 
Shortly after the framework agreement is signed, T orders 50 parts. Y notes that:
– price reductions are dependent only on the passage of time and not on 
previous purchase orders. Therefore, the purchase order does not provide T 
with a material right; and
– the purchase order fixes the price for the parts to be delivered. Therefore, the 
consideration in the contract is not variable. 
When T submits subsequent purchase orders, Y assess whether they should 
be combined with the first one (see 
Chapter 1
) and whether the contract 
modification guidance should be applied (see 
Chapter 8
).