Revenue – ifrs 15 handbook

Sales of by-products may be in the scope of the standard
An entity may produce by-products as part of its operations. In these cases, 
an entity needs to evaluate all facts and circumstances to determine the 
appropriate guidance to apply.
If a by-product is a routine output of the primary manufacturing process and 
its sales are part of ongoing operations, then the transaction is often in the 
scope of the revenue standard – i.e. the sale is accounted for and presented 
as revenue.
Conversely, if on rare occasions an entity sells scrap or a by-product that is not 
an output of its primary manufacturing process, then these transactions may 
be outside the scope of the revenue standard – i.e. the transactions would be 
accounted for and presented as other income.
6.2 
Out of scope
IFRS 15.5
The standard does not apply to:
– lease contracts; 
– insurance contracts;
– financial instruments and other contractual rights or obligations in the scope of 
other specific guidance;
– guarantees (other than product or service warranties); and
– non-monetary exchanges between entities in the same line of business that 
facilitate sales to customers other than the parties to the exchange.

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164 | Revenue – IFRS 15 handbook
Example 2 – Non-monetary exchanges between telecom 
companies
Telco T and Telco B provide wireless services such as voice, data and text to their 
customers. However, they maintain and operate networks in different regions. 
T and B have agreed to exchange airtime and network capacity to ensure that 
their customers always have access to wireless services. The exchange is 
expected to be approximately equal and the contract requires no payment 
between the entities. Also, T and B have concluded that the exchange does not 
include a sale of property, plant and equipment or a lease.
This transaction is outside the scope of the revenue standard because T and 
B have entered into an agreement that is a non-monetary exchange between 
entities in the same line of business to facilitate sales to their customers. 
Because this transaction is outside the scope of the revenue standard for both 
T and B, it is excluded from the disclosures required by the revenue standard, 
including the presentation of revenue from contracts with customers.