Revenue – ifrs 15 handbook

Example 7B – Current vs non-current classification: Contract 
liabilities: Full prepayment for a good that transfers over time
Modifying Example 7A, control over the residential unit transfers over time. 
Developer D uses the cost-to-cost method to measure its progress and 
performs evenly throughout the project.
The analysis is the same as in Example 7A except that under Approach 2 when 
D defaults to the 12-month operating cycle D classifies 200 as non-current and 
100 related to the amount of revenue expected to be recognised during the next 
12 months as current. D reclassifies the balance of 200 proportionally as current 
as it progresses with the construction based on the measure of progress.
11.1.1 
Contract assets vs receivables
IFRS 15.105, 108, IFRS 9
If the entity has an unconditional right to consideration, then this is presented as a 
receivable. A right to consideration is ‘unconditional’ if only the passage of time is 
required before payment becomes due. Receivables are presented separately from 
contract assets and cannot be netted against contract liabilities. 
An entity accounts for receivables, including their measurement and disclosure, 
using the financial instruments guidance. On initial recognition of a receivable, 
any difference between the measurement of that receivable using the financial 
instruments guidance (e.g. impairment as a result of credit risk) and the 
corresponding amount of revenue recognised is presented as an expense. Any 
subsequent impairment of the receivable is also accounted for as an expense.
Example 8 – Contract liability and receivable: Non-cancellable 
contract
IFRS 15.IE199–IE200
Modifying 
Example 1
in this chapter, assume that Manufacturer D’s contract 
is non-cancellable. D has an unconditional right to consideration on 31 January 
2019 and therefore it recognises a receivable. D records the following entries to 
account for:
– the receivable on 31 January 2019 and the related contract liability;
– cash received on 1 March 2019; and
– revenue on transfer of the product on 31 March 2019.
Debit
Credit
31 January 2019
Receivable
1,000
Contract liability
1,000
To record consideration due

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11 Presentation | 309
11.1 Statement of financial position
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Debit
Credit