Revenue – ifrs 15 handbook

3.2 Significant financing component
Assessment is undertaken at the individual contract level .............................................................................................. 70
No significant financing component if the timing of transfer of goods or services is at the customer’s discretion ........... 70
Contracts with a payment scheduled for part-way through the performance period may contain a significant
financing component ...................................................................................................................................................... 70
Contracts with material right may contain a significant financing component ................................................................. 71
Limited examples in the standard of when payments have a primary purpose other than financing ............................... 71
Accounting for long-term and multiple-element arrangements with a significant financing component may
be complex ..................................................................................................................................................................... 71
Using an interest rate that is explicitly specified in the contract may not be appropriate ................................................. 72
Interest income recognised from a significant financing component may be presented as ‘revenue’ but not
‘revenue from contracts with customers’........................................................................................................................ 72
Advance payments may affect EBITDA ........................................................................................................................... 72
Application of the practical expedient to a contract with multiple performance obligations ............................................. 73
A contract with an implied interest rate of zero may contain a financing component ....................................................... 73
Interest accrued on a contract liability is a borrowing cost eligible for capitalisation .........................................................74