IFRS 15Chapter 3Lesson 1
Step 1: identifying the contract and combining contracts
Step 1 of 8Learning objectives
Go deeper+3 deeper insights · +1 calculation · +1 journal entry · +1 point of attention
No revenue without an enforceable contract: the five cumulative criteria of a contract, the assessment of collectability, the contract term, the wholly unperformed contract, the reassessment of the criteria, the treatment of an amount received while the criteria are not met, and the combination of contracts negotiated together.
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Learning objectives
- Test the five cumulative criteria for the existence of a contract under IFRS 15.
- Assess the probability of collection based on the customer's ability and intention to pay.
- Determine the contract term and account for an amount received when the criteria are not met (liability, then revenue on an event set by the standard).
- Determine whether several contracts entered into with the same customer must be combined.