Revenue – ifrs 15 handbook

Example 2 – Full retrospective method
Software Company Y enters into a contract with a customer to provide a 
software term licence and telephone support for two years for a fixed amount of 
400. The software is delivered and operational on 1 July 2016. Y adopts the new 
revenue standard on 1 January 2018 and presents two years of comparatives.
Under the previous requirements, Y recognises revenue for the arrangement on 
a straight-line basis over the 24-month contract term, beginning on 1 July 2016.
Under the new standard, Y determines that the contract consists of two 
performance obligations: the software licence and the telephone support. Y 
allocates 300 of the transaction price to the software licence and 100 to the 
telephone support.
Y determines that the telephone support is a performance obligation satisfied 
over time and its progress is best depicted by time elapsed data: 2016: 25, 2017: 
50 and 2018: 25. The software licence is a point-in-time performance obligation 
and the 300 is recognised as revenue on the delivery date of 1 July 2016.
Y elects to adopt the new standard retrospectively and presents the following 
amounts.
2016
2017
2018
Revenue
325
1
50
25
Note
1. Calculated as 300 for the software licence plus 25 for the telephone support.

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330 | Revenue – IFRS 15 handbook
Y does not need to make an opening adjustment to equity at 1 January 2016 
because the contract began on 1 July 2016. 
Y also considers the effect of the change in revenue recognition on related cost 
balances and makes appropriate adjustments.
All contracts (open and closed) under previous requirements