Revenue – ifrs 15 handbook

At end of Year 2
Before 
modification
After 
modification
Cumulative revenue
750,000
1
780,000
2
Adjustment to revenue
30,000
3
Notes
1. Calculated as 1,000,000 × 600,000 / 800,000.
2. Calculated as (1,000,000 + 300,000) × 600,000 / (800,000 + 200,000).
3. Calculated as 780,000 - 750,000.
M therefore increases the cumulative amount of revenue recognised at the end 
of Year 2 by 30,000 to 780,000.
Example 5 – Contract modification: Partially satisfied performance 
obligation and additional distinct goods or services
Company Z enters into a contract with Customer C for a specialised asset 
(Product S) for consideration of 1 million. Z has determined that the revenue 
should be recognised over time using the cost-to-cost method. 
At the end of Year 1, Z has satisfied 30% of its performance obligation. 
Therefore, Z has recognised 300,000 of revenue up to the end of Year 1.
At the beginning of Year 2, the parties agree to change the specification of S and 
increase the consideration by 100,000. Additionally, Z agrees with C to deliver 
Product X for 120,000 along with S. 
S and X are distinct goods and therefore represent separate performance 
obligations. The price of X is significantly discounted from its stand-alone selling 
price of 150,000. 
Because the price of X is not commensurate with its stand-alone selling price, 
X cannot be accounted for as a separate contract. Therefore, both S and X are 
considered part of the same contract when accounting for the modification.

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8 Contract modifications | 203
8.2 Accounting for a contract modification
| 
Z accounts for the modification as follows.