Revenue – ifrs 15 handbook

11.1 
Statement of financial position
IFRS 15.105
An entity presents a contract liability or a contract asset in its statement of financial 
position when either party to the contract has performed. The entity ‘performs’ 
by transferring goods or services to the customer, and the customer performs by 
paying consideration to the entity.
Rights and
obligations
(Net) contract
liability
if obligations > rights
(Net) contract
asset
if rights > obligations
IFRS 15.105–107
Any unconditional rights to consideration are presented separately as a receivable. 
‘Contract liabilities’ are obligations to transfer goods or services to a customer 
for which the entity has received consideration, or for which an amount of 
consideration is due from the customer.
‘Contract assets’ are rights to consideration in exchange for goods or services that 
the entity has transferred to a customer when that right is conditional on something 
other than the passage of time. Contract assets are assessed for impairment under 
the requirements in the financial instruments standard.
IFRS 15.109
An entity may use alternative captions for the contract assets and contract liabilities 
in its statement of financial position. However, it needs to provide sufficient 
information to distinguish a contract asset from a receivable.
Example 1 – Contract liability and receivable: Cancellable contract
IFRS 15.IE198
On 1 January 2019, Manufacturer D enters into a cancellable contract to transfer 
a product to Customer E on 31 March 2019. The contract requires E to pay 
consideration of 1,000 in advance on 31 January 2019. E pays the consideration 
on 1 March 2019 – i.e. after the due date. D transfers the product on 31 March 
2019. D records the following entries to account for:
– cash received on 1 March 2019 and the related contract liability; and
– revenue on transfer of the product on 31 March 2019.

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
300 | Revenue – IFRS 15 handbook
In this example, D does not have an unconditional right to consideration on 
31 January 2019 and therefore it does not have a receivable.
Debit
Credit
1 March 2019
Cash
1,000
Contract liability
1,000
To record cash of 1,000 received (cash is 
received in advance of performance)
31 March 2019
Contract liability
1,000
Revenue
1,000
To record D’s satisfaction of performance 
obligation