Revenue – ifrs 15 handbook

Factor
Example
An entity receives an advance payment, and the 
timing of the transfer of goods or services to a 
customer is at the discretion of the customer
A prepaid phone card or 
customer loyalty points
A substantial portion of the consideration 
is variable, and the amount or timing of the 
consideration is outside the customer’s or entity’s 
control
A transaction whose 
consideration is a sales-
based royalty
The difference between the amount of promised 
consideration and the cash selling price of the 
promised goods or services arises for non-finance 
reasons
Protection against 
a counterparty not 
completing its obligations 
under the contract
IFRS 15.64
The standard indicates that: 
– an entity should determine the discount rate at contract inception, reflecting the 
credit characteristics of the party receiving credit; and 
– the discount rate should not generally be updated for a change in circumstances.
IFRS 15.63
As a practical expedient, an entity is not required to adjust the transaction price for 
the effects of a significant financing component if, at contract inception, it expects 
the period between customer payment and the transfer of goods or services to be 
one year or less. 
For contracts with an overall duration greater than one year, the practical expedient 
applies if the period between performance and payment for that performance is 
one year or less.

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3 Step 3 – Determine the transaction price | 65
3.2 Significant financing component
| 
Practical expedient
available