Revenue – ifrs 15 handbook

Example 6 – Investment contracts that are not insurance contracts
Insurer X enters into an investment contract with a customer. Under the 
terms of the contract, X is obliged to return the underlying investment to the 
customer, net of management services fees. The management fee is set as a 
fixed percentage of the investment value. 
IFRS 4.A, IAS 32.11
X concludes that the contract does not transfer significant insurance risk 
and is therefore not an insurance contract. X also identifies that the contract 
includes two components: a financial liability to the customer for the return of 
the underlying investment amount and an investment management service 
component. 
Because the contract includes a financial liability, X first applies the initial 
recognition and measurement requirements in the financial instruments 
standard to measure it. X then allocates the residual amount to the investment 
management services. X determines that the initial investment received is the 
fair value of the financial liability. Therefore, there is no remaining amount to 
allocate to the investment management services at inception of the contract.
Subsequently, X measures the financial liability in accordance with the financial 
instruments standard and accounts for all of the management service fee 
charged under the contract in accordance with the revenue standard.
Example 7 – Media: Collaborative arrangement
Studio B and Television Channel C enter into an arrangement to develop a 
new television show. Under the agreement, B and C will jointly decide on the 
script, budget and number of episodes. C receives the licence to the show 
for its jurisdiction and B is able to sell the rights to television channels in other 
jurisdictions. C will reimburse B for 50% of the costs incurred during production 
and make a fixed payment of 5,000 to B when the television series is complete.
In this example, B needs to analyse carefully whether all or any part of the 
arrangement with C is in the scope of the revenue standard. For example, B 
considers whether the final fixed payment is part of a collaborative arrangement 
or represents a payment for a licence in the scope of the standard.

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6 Scope | 171
6.4 Portfolio approach
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