Revenue – ifrs 15 handbook

Quantity subject to confirmation after delivery is variable 
consideration
In some contracts, the actual quantity delivered may be confirmed after 
control transfers to the customer (see 
Chapter 5
). For example, a mining 
entity transfers control of copper concentrate to a customer and then the 
customer determines the actual quantity of copper delivered after processing 
the concentrate. The final amount paid by the customer is based on this actual 
quantity. It appears that these arrangements, in which the transaction price may 
vary depending on the quantity subject to confirmation after delivery, represent 
variable consideration.
Provisional pricing based on market price of commodity
IASBU 12-15
Some contracts may contain provisional pricing features under which the 
transaction price is based on the spot rate of the commodity at the payment 
due date. This may be later than the date at which the performance obligation 
is satisfied. In contrast with the scenarios discussed above, variability arising 
solely from changes in the market price after control transfers is not subject 
to the variable consideration guidance in the standard. This is because at the 
delivery date a receivable already exists and it is in the scope of the financial 
instruments standard.
Variable consideration or optional purchases
Different outcomes and disclosure requirements can arise depending on 
whether an entity concludes that purchases of additional goods or services 
by a customer are exercises of customer options or variable consideration. 
Future purchases that are options will be evaluated to determine whether 
they include a material right. Future purchases that are variable consideration 
are included in the initial identification of performance obligations and 
determination of the transaction price, and may lead to additional estimation 
and disclosure requirements.
Distinguishing between customer options and variable consideration will 
require significant judgement and will require entities to assess the nature of 
their promise to the customer and evaluate the presently enforceable rights and 
obligations of the parties to the arrangement.
– 
Options for additional goods or services:
The customer has a present 
contractual right to purchase additional distinct goods or services. Each 
exercise of an option is a separate purchase decision and transfer of control 
of additional goods and services by the entity if the customer is not currently 
obliged under the contract to do so. Before the customer’s exercise of the 
option, the vendor is not obliged to provide those goods or services and 
does not have a right to receive consideration. The customer options need 
to be evaluated to determine whether they provide the customer with a 
material right.

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3 Step 3 – Determine the transaction price | 51
3.1 Variable consideration (and the constraint)
| 
– 
Variable consideration:
The contract with the customer obliges the vendor 
to stand ready to transfer the promised goods or services and the customer 
does not make a separate purchase decision for the additional goods or 
services to be provided by the vendor. The future event that results in 
additional consideration occurs as the performance obligation is being 
satisfied (i.e. when control of the goods or services is transferred to 
the customer).