Revenue – ifrs 15 handbook

Example 23 – Determining whether an arrangement has a 
significant financing component: No adjustment for the financing 
component
Telco T enters into a one-month wireless contract with Customer C that includes 
voice and data services and a handset. The monthly service fee represents the 
price charged to customers that bring their own device (i.e. it is the stand-alone 
selling price of the service). 
C makes no up-front payment for the phone but will pay its stand-alone selling 
price by monthly instalments over 24 months. There is no additional interest 
charge for the financing. Full repayment of the remaining balance of the phone 
becomes due if C fails to renew the monthly service contract. There is no other 
amount due if C does not renew. 
T determines that the term of the contract is one month. T then needs to assess 
whether the instalment plan on the handset conveys a significant financing 
component to the customer. 
In making this assessment, T observes that instalment payments are due 
immediately if the service contract is not renewed. Thinking about this 
conditionality and the contract term together, T may conclude that either 
the financing component may not be significant or the practical expedient 
applies. In these cases, T would not adjust the transaction price for the 
financing component. T also needs to consider the applicable financial 
instrument guidance in the measurement of any receivable resulting from the 
instalment plan.

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78 | Revenue – IFRS 15 handbook
3.3
Non-cash consideration
IFRS 15.66–67
Non-cash consideration received from a customer is measured at fair value. If an 
entity cannot make a reasonable estimate of the fair value, then it refers to the 
estimated selling price of the promised goods or services.
IFRS 15.68
Estimates of the fair value of non-cash consideration may vary. Although this may 
be due to the occurrence or non-occurrence of a future event, it can also vary due to 
the form of the consideration – e.g. variations due to changes in the price per share 
if the non-cash consideration is an equity instrument.
When the fair value of non-cash consideration varies for reasons other than the form 
of the consideration, those changes are reflected in the transaction price and are 
subject to the guidance on constraining variable consideration.
IFRS 15.69
Non-cash consideration received from the customer to facilitate an entity’s 
fulfilment of the contract – e.g. materials or equipment – is accounted for if and 
when the entity obtains control of those contributed goods or services.
IFRS 15.126, IE156–158, BC254A–BC254G
The standard does not provide specific guidance on the measurement date for 
non-cash consideration. It appears that an entity should apply judgement, based 
on the relevant facts and circumstances, to determine whether to measure non-
cash consideration with reference to the date on which the contract is entered 
into, the date the non-cash consideration is received or the date the performance 
obligation is satisfied. Changes in the fair value of non-cash consideration after the 
measurement date are not included in the transaction price.