Revenue – ifrs 15 handbook

Total
14,000
14,000
16,000 100.0%
14,000
In Year 1, ABC recognises 8,750 when it transfers control of the equipment to 
the customer and 1,750 as it satisfies the related maintenance performance 
obligation. The difference between the amount recognised as revenue and 
consideration received of 1,500 (12,000 - 8,750 - 1,750) is recognised as 
a contract liability. The amounts allocated to the renewal options will be 
recognised as the performance obligations are satisfied.
If the customer does not exercise its options, then ABC recognises as revenue 
the amounts allocated to all remaining options.
Example 9B – Applying the practical alternative: Portfolio approach
Modifying Example 9A, ABC Corp estimates the total number of expected 
goods or services for the 100 contracts based on expectations for similar 
customers. It estimates the number of renewals and corresponding expected 
transaction price. It also concludes that the stand-alone selling price for each 
maintenance period is the same.

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278 | Revenue – IFRS 15 handbook
Based on its expectations, it allocates the transaction price to each performance 
obligation as follows.
Performance 
obligation
Contract 
price
Expected 
renewals
Expected 
consider- 
ation
Stand-
alone 
selling 
price
Selling 
price