Revenue – ifrs 15 handbook

 
Additional application examples
Example 2 – Impairment assessment of contract assets: Variable 
consideration
Company X enters into a contract with Customer C to deliver 100 tonnes 
of copper concentrate for 100. C determines the actual quantity of copper 
delivered after processing the concentrate. X delivers copper concentrate on 
20 December and C is expected to confirm the actual quantity on 15 January.
X determines that the consideration under the contract is variable and therefore 
it applies the constraint. On 20 December, X recognises revenue and a contract 
asset of 80. At 31 December, X assesses the contract asset for impairment. X 
expects to recover 95% of the transaction price.
We believe that X should perform the impairment assessment of the contract 
asset based on the constrained consideration of 80 and recognise an 
impairment loss of 4 (80 - 80 × 95%).
Alternatively, X can perform the impairment assessment based on the 
unconstrained amounts and recognise the impairment loss in proportion to 
the contract assets recognised. This would lead to the same outcome as the 
impairment assessment based on the constrained amounts – i.e. an impairment 
loss of 4 ((100 - 100 × 95%) × 80 / 100).

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11 Presentation | 305
11.1 Statement of financial position
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Example 3 – Impairment assessment of contract assets: Contracts 
with multiple performance obligations
Company M enters into a contract with Customer L to provide tax advice, 
accounting training to L’s employees and advice on implementing a new 
accounting standard for total consideration of 300. M determines that the 
contract contains three separate performance obligations. Under the contract, 
M has an unconditional right to receive consideration on issuing an invoice 
for work performed. At 31 December, M has a trade receivable of 120 and a 
contract asset of 14. 
M allocates revenue, invoiced amounts and contract assets to each 
performance obligation as follows.