Revenue – ifrs 15 handbook

Fixed 
consideration
Variable 
consideration
Total
At end of Year 1 (contract 35% 
complete)
Estimated transaction price
5,000
200
5,200
Revenue recognised in Year 1 (35%)
1,750
70
1,820
At end of Year 2 (contract 90% 
complete)
Estimated transaction price
5,000
1,000
6,000
Cumulative revenue to end of Year 2 
as contract is 90% complete
4,500
900
5,400
Less revenue recognised in Year 1
(1,750)
(70)
(1,820)
Revenue recognised in Year 2
2,750
830
3,580

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© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
322 | Revenue – IFRS 15 handbook
In the financial statements for Year 2, M discloses the amount of revenue 
recognised in Year 2 as a result of the change in the transaction price. Because 
the transaction price increased by 800 (1,000 - 200) and the contract was 
35% complete at the end of Year 1, the amount to be disclosed as revenue 
recognised in the reporting period from a performance obligation partially 
satisfied in a previous period is 280 (800 × 35%).
12.1.3 
Performance obligations
IFRS 15.119–120
An entity provides the following information about its performance obligations:
– 
when the entity typically satisfies its performance obligations:
e.g. on shipment, 
on delivery, as services are rendered or on completion of service;
– 
significant payment terms:
e.g. whether the contract has a significant financing 
component, the consideration is variable and the variable consideration is 
constrained;
– 
the nature of the goods or services
that it has promised to transfer, highlighting 
any performance obligations to arrange for another party to transfer goods or 
services (if the entity is acting as an agent);
– 
obligations for returns, refunds
and other similar obligations;
– 
types of warranties
and related obligations; and
– 
the aggregate amount of the transaction price allocated to performance 
obligations that are unsatisfied
(or partially unsatisfied) at the reporting date. 
The entity also provides either a quantitative (using time bands) or a qualitative 
explanation of when it expects that amount to be recognised as revenue.
IFRS 15.121
As a practical expedient, an entity is not required to disclose the transaction price 
allocated to unsatisfied (or partially unsatisfied) performance obligations if:
– the contract has an original expected duration of one year or less; 
– the entity applies the practical expedient to recognise revenue at the amount 
to which it has a right to invoice, which corresponds directly to the value to the 
customer of the entity’s performance completed to date – e.g. a service contract 
in which the entity bills a fixed hourly amount (see 
5.3.1
).
IFRS 15.122
The entity also discloses whether it is applying the practical expedient and whether 
any consideration from contracts with customers is not included in the transaction 
price – e.g. whether the amount is constrained and therefore not included in 
the disclosure.

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© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
12 Disclosure | 323
12.1 Annual disclosure
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