Revenue – ifrs 15 handbook

Limited hindsight allowed
IFRS 15.BC437
Practical expedient 2 only exempts an entity from applying the requirements 
on variable consideration, including the constraint in Step 3 of the model. The 
entity is still required to apply all other aspects of the model when recognising 
revenue for the contract.
By allowing the use of hindsight in estimating variable consideration, this 
practical expedient eliminates the need to:
– determine what the estimated transaction price would have been at the end 
of each comparative reporting period; and therefore
– collect the information necessary to estimate the transaction price at the end 
of those periods.
Use of the practical expedient may bring forward revenue 
recognition
The use of this practical expedient will accelerate revenue recognition in 
many circumstances as compared with the full retrospective approach if the 
constraint in Step 3 of the model would otherwise have applied. This is because 
the final transaction price is used from inception of the contract.
13.2.3 
Practical expedient 3 – Contract modifications before the 
earliest period presented
IFRS 15.C5(c)
Under practical expedient 3, an entity need not separately evaluate the effects 
of contract modifications before the beginning of the earliest reporting period 
presented using the contract modifications requirements in the standard. 
Instead, an entity may reflect the aggregate effect of all of the modifications that 
occur before the beginning of the earliest period presented in: 
– identifying the satisfied and unsatisfied performance obligations;
– determining the transaction price; and
– allocating the transaction price to the satisfied and unsatisfied performance 
obligations.

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13.2 Retrospective method
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