Revenue – ifrs 15 handbook

Example 19 – Telco: Term wireless service contract with fixed fee 
and limited usage
Telco T enters into a two-year wireless contract with Customer C to provide 
120 minutes of voice service for a fixed fee of 20 per month. The voice plan 
allows C to use 120 minutes each month for calls and the handset will not 
function for voice purposes once the minutes are used. The 120 minutes expire 
at the end of every month. 
T concludes that the voice services are satisfied over time because C receives 
and consumes the benefit from the services as they are provided – e.g. 
customers generally benefit from each minute that they receive T’s services.
T determines that each minute is distinct because C benefits from that minute 
of service on its own. Additionally, each minute is separable from those 
preceding and following it – i.e. one service period does not significantly affect, 
modify or customise another.
T applies the series guidance and concludes that its contract with C is a single 
performance obligation to provide 2,880 minutes (120 × 24 months) of wireless 
service. T determines that each of the distinct minutes of voice is satisfied over 
time and the same method would be used to measure progress.
Example 20 – Automotive: Maintenance contract
Carmaker M enters into a 10-year maintenance contract with Customer C. M 
provides C with an integrated service of maintenance and related activities for 
equipment that M sold to C. C pays M based on the equipment hours used 
during the contract period, regardless of whether M performs maintenance or 
makes repairs during that period.
M concludes that it is providing a stand-ready service to C because the nature of 
the promise is to deliver an unknown quantity of the underlying activities as an 
integrated service when and as needed by C for 10 years. 
M concludes that each day of service is distinct, because C can continually 
benefit from the equipment covered by the contract and each day is separately 
identifiable – i.e. one service period does not significantly affect, modify or 
customise another.

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2 Step 2 – Identify the performance obligations in the contract | 45
2.3 Series of distinct goods or services
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However, M applies the series guidance and concludes that its contract with C 
is a single performance obligation to provide 10 years of maintenance, because 
revenue will be recognised over time as C consumes the benefit of the service 
as it’s provided and the same measure of progress would be applied for each 
distinct increment because the promise is the same for each increment.