Revenue – ifrs 15 handbook

Amounts payable to a customer may be either variable 
consideration or consideration payable to a customer
The standard states that consideration payable to a customer includes amounts 
that an entity pays or expects to pay to a customer or to other parties that 
purchase the entity’s goods or services from the customer. The guidance on 
consideration payable to a customer states that it is recognised at the later 
of when the entity recognises revenue or when the entity pays or promises 
to pay the consideration. However, because consideration payable to a 
customer can be included in the transaction price, it can also be a form of 
variable consideration.
Variable consideration is estimated and included in the transaction price at 
contract inception, and remeasured at each subsequent financial reporting date. 
This is different from the guidance on when to recognise consideration payable 
to a customer.
This discrepancy puts pressure on the determination, at contract inception, 
of whether the entity intends to provide an incentive or the customer has a 
reasonable expectation that an incentive will be provided. 
This evaluation includes an assessment of the entity’s past practice and other 
activities that could give rise to an expectation at contract inception that the 
transaction price includes a variable component. The consideration payable to 
a customer guidance is used only when an entity has not promised a payment 
to the customer at contract inception, either implicitly (including through its 
customary business practice) or explicitly.
 
Additional application examples
Example 29 – Payments to customers: Goodwill credits
Customer C has a two-year network service contract with Telco T. In Month 6, T 
experiences two days of service quality issues. Past experience indicates that 
service quality issues are infrequent for T. 
In Month 7, C receives a bill of 100 for Month 6 services. On receiving the bill, 
C calls T and requests a credit for the service outage. Although it is not its usual 
practice, T grants C a credit of 5. 
Because the credit can be applied against amounts owed to T, it is accounted for 
as consideration payable to the customer. And, because the payment is not in 
exchange for a distinct good or service, the consideration is accounted for as a 
reduction in the transaction price.

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
86 | Revenue – IFRS 15 handbook