Revenue – ifrs 15 handbook

Stand-alone 
selling price
Relative stand-
alone selling price
Licence
300,000
272,880
Post-contract support
200,000
181,920
Because E has a history of granting price concessions of between 20% and 
60% of the final year’s contractual post-contract support fees, including any 
of the potential post-contract support discount less than the 60% maximum 
in the transaction price carries the risk of a revenue reversal. However, E does 
not constrain its estimate of the transaction price below 454,800 because the 
revenue reversal that would result from the possible incremental discount of 
18% (60% - 42%) or 10,800
2
would not be significant to the cumulative revenue 
recognised to date under the contract. For example, an adjustment to the 
transaction price immediately after transfer of control of the software licence 
would result in a reversal of only 6,480
3
(compared with cumulative revenue 
recognised of 272,880). 
If E did not have a history of granting price concessions and it was not 
expected at contract inception, then it would account for any subsequent price 
concession as a contract modification (see 
Section 8.2
).
Notes
1. Calculated as 480,000 - (42% × 60,000). 
2. Calculated as 60,000 × 18%.
3. Calculated as 10,800 × (300,000 / 500,000).
3.2
Significant financing component
IFRS 15.60
To estimate the transaction price in a contract, an entity adjusts the promised 
amount of consideration for the time value of money if that contract contains a 
significant financing component.
IFRS 15.61
The objective when adjusting the promised amount of consideration for a significant 
financing component is to recognise revenue at an amount that reflects what the 
cash selling price of the promised good or service would have been if the customer 
had paid cash at the same time as control of that good or service transferred to the 
customer. The discount rate used is the rate that would be reflected in a separate 
financing transaction between the entity and the customer at contract inception.

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64 | Revenue – IFRS 15 handbook
To make this assessment, an entity considers all relevant factors – in particular the:
– difference, if there is any, between the amount of promised consideration and 
the cash selling price of the promised goods or services; 
– combined effect of:
- the expected length of time between the entity transferring the promised 
goods or services to the customer; and 
- the customer paying for those goods or services; and
– prevailing interest rates in the relevant market.
IFRS 15.62
A contract does not have a significant financing component if any of the following 
factors exists.