Revenue – ifrs 15 handbook

5.4
Performance obligations satisfied at a point in 
time
IFRS 15.32–33
If a performance obligation is not satisfied over time, then an entity recognises 
revenue at the point in time at which it transfers control of the good or service to 
the customer. An entity has ‘control’ of a good or service when it has the ability to 
direct the use of, and obtain substantially all of the remaining benefits from, the good 
or service.

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5 Step 5 – Recognise revenue when or as the entity satisfies a performance obligation | 149
5.4 Performance obligations satisfied at a point in time
| 
The ‘benefits’ of an asset are the potential cash flows – inflows or savings in 
outflows – that can be obtained directly or indirectly, including by:
– using the asset to:
- produce goods or provide services (including public services);
- enhance the value of other assets; and
- settle liabilities or reduce expenses;
– selling or exchanging the asset;
– pledging the asset to secure a loan; and 
– holding the asset.
IFRS 15.38
The standard includes indicators of when the transfer of control occurs.
... a present
obligation
to pay
... physical
possession
... legal title
... risks and
rewards of
ownership
... accepted
the asset
Indicators that control has passed include a customer having...
Relevant considerations include the following.
– In some cases, possession of legal title is a protective right and may not coincide 
with the transfer of control of the goods or services to a customer – e.g. when a 
seller retains title solely as protection against the customer’s failure to pay.
– In consignment arrangements (see 
Section 5.6
) and some repurchase 
arrangements (see 
Section 5.5
), an entity may have transferred physical 
possession but still retain control. Conversely, in bill-and-hold arrangements 
(see 
Section 5.7
) an entity may have physical possession of an asset that the 
customer controls. 
– In some arrangements, a customer may obtain control of an asset before it 
has physical possession – e.g. a bank purchasing a fixed amount of gold from a 
mine may be able to sell the gold for immediate physical settlement before the 
refinement process is completed.
– When evaluating the risks and rewards of ownership, an entity excludes any risks 
that give rise to a separate performance obligation in addition to the performance 
obligation to transfer the asset. In some cases, the customer may have the 
rewards of ownership, but not the risks. This does not necessarily preclude the 
customer from having control. An entity considers whether the other indicators 
are more relevant and the customer’s ability to direct the use of and obtain 
substantially all of the benefits from the asset.
– An entity needs to assess whether it can objectively determine that a good 
or service provided to a customer conforms to the specifications agreed in a 
contract (see 
Section 5.8
).

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