Revenue – ifrs 15 handbook

Constraint does not apply when variation is due to the form of 
non-cash consideration
IFRS 15.BC251–BC252
The requirement to constrain estimates of variable consideration applies 
regardless of whether the amount received will be cash or non-cash 
consideration. Therefore, variability in the estimate of the fair value of non-
cash consideration is constrained if that variability relates to changes in the fair 
value for reasons other than the form of the consideration – i.e. changes other 
than the price of the non-cash consideration. If the variability is because of the 
entity’s performance – e.g. a non-cash performance bonus – then the constraint 
applies. If the variability is because of the form of the non-cash consideration 
– e.g. changes in the stock price – then the constraint does not apply and the 
transaction price is not adjusted.
The determination of whether a change in fair value was caused by the form of 
the non-cash consideration or other reasons, and the determination of how to 
allocate fair value changes between those affecting transaction price and those 
that do not, may be challenging in some situations.

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80 | Revenue – IFRS 15 handbook
Transfers of assets from customers
In certain industries, it is common for entities to receive transfers of property, 
plant and equipment (or cash to acquire it) from their customers in return for a 
network connection and/or an ongoing supply of goods or services. 
The nature of these arrangements can vary widely. In some arrangements, the 
party that transfers the assets (the transferor) is the party that receives access 
to a supply of goods or services (the ultimate customer). In other arrangements, 
the transferor is not the ultimate customer or is the ultimate customer for only 
a short period of time. For example, a property developer builds a residential 
complex in an area that is not connected to the water mains. To connect to the 
water mains, the property developer is required to install a network of pipes and 
to transfer them to the water supply company, which will supply future services 
to the residents of the complex.
An entity that receives such contributed assets evaluates all relevant facts and 
circumstances to determine the appropriate accounting, including whether the 
contribution is part of a contract with a customer in the scope of the standard 
(see 
Chapter 6
). If the contract is in the scope of the standard, then the entity 
determines whether: 
– the connection to the supply of future services transfers a distinct good or 
service to the customer (see 
Chapter 2
); and
– the contributed assets are non-cash consideration to be included in the 
transaction price. 
An entity considers all of its obligations under the contract to determine the 
appropriate timing of revenue recognition.