Revenue – ifrs 15 handbook

Product and service warranties – Revenue vs provisions standard
IFRS 15.B28–B33
Entities with product or service warranties apply the guidance in the revenue 
standard (see 
Section 10.2
) to determine whether to account for them under 
the revenue or the provisions standard.
Contributions in non-exchange transactions are outside the scope 
of the standard
CF4.68, IFRS 15.BC28
A ‘contribution’ is a non-reciprocal transfer of cash or other assets, rather than an 
exchange transaction – i.e. it is not given in exchange for goods or services that 
are an output of the entity’s ordinary activities. Accordingly, contributions are not 
transactions with a customer, because a customer is defined in the standard as 
a party that has contracted with an entity to obtain goods or services that are an 
output of the entity’s ordinary activities in exchange for consideration. Therefore, 
non-reciprocal contributions are not in the scope of the standard. 
A not-for-profit entity may enter into some transactions that are contributions 
and others that are not. A not-for-profit entity therefore needs to evaluate which, 
if any, of its transactions are either fully or partially in the scope of the standard.

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
6 Scope | 165
6.3 Partially in scope
| 
Settlement of imbalances in non-monetary exchanges
IFRS 15.5(d), BC58
Some exchanges between entities in the same line of business that facilitate 
sales to customers may involve similar goods or services of unequal value – 
e.g. there may be a time gap that affects the pricing of the good or the goods 
may differ in specification. In these cases, entities may settle the accumulated 
imbalances in cash periodically – e.g. on a quarterly or annual basis. The 
imbalance settled in cash often represents a small proportion of the gross 
exchange under the arrangement.
The fact that the imbalances may be settled in cash does not necessarily cause 
the exchange to become ‘monetary’ and result in the transaction being in the 
scope of the standard. 
An entity needs to evaluate all facts and circumstances of the transaction, 
including the nature and the objective of the exchange, in determining whether 
it falls in the scope of the standard. In making this assessment, the entity 
also considers the relevance of the resulting information to the users of the 
financial statements.