Revenue – ifrs 15 handbook

Example 18 – Applying ‘as-invoiced’ practical expedient: Enterprise 
service contract with usage fee treated as variable consideration
Telco T enters into a contract with enterprise Customer C to provide call centre 
services. These services include providing dedicated infrastructure and staff to 
stand ready to answer calls. T receives consideration of 0.50 per minute for each 
call answered.
T has separately concluded that its performance obligation is the overall service 
of standing ready to provide call centre services each day, rather than each call 
answered. Because C simultaneously receives and consumes the benefits of 
the service of standing ready each day the service is provided, the performance 
obligation is satisfied over time. T also observes that the arrangement meets 
the series guidance because each time increment of standing ready to provide 
call centre services is distinct, is essentially the same and has the same pattern 
of transfer.
Furthermore, T has concluded that the per-minute fee is variable consideration. 
In assessing the appropriate pattern of transfer (i.e. measure of progress 
in satisfying the performance obligation), T considers whether the variable 
consideration needs to be estimated at contract inception. 
T expects its performance to be fairly consistent during the contract and 
observes that the pricing in this contract is consistent with pricing in similar 
contracts with similar customers. T also observes that the variable consideration 
for each day (i.e. the per-minute fee) relates to the entity’s effort to satisfy 
the promise of standing ready each day. Furthermore, T observes that it has a 
right to consideration from C for each minute used (for practical reasons these 
amounts may be invoiced on a monthly basis). In addition, T concludes that 
the per-minute usage corresponds directly with the value to C of the service 
provided by T (i.e. the service of standing ready). Therefore, T concludes that 
revenue can be recognised based on the contractual right to bill.