IFRS 15Chapter 6Lesson 2
Step 4 (2): discounts, allocated variable consideration and price changes
Step 1 of 8Learning objectives
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By default, a discount is spread over all the performance obligations. It is reserved for some obligations only if regular separate sales prove it (three conditions). Variable consideration related to a single obligation is allocated entirely to it if two criteria are met. When the transaction price changes after inception, the change follows the original basis, and the share of obligations already satisfied is recognised immediately.
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Learning objectives
- Recognise a discount and determine whether it is spread over all the obligations or over some only.
- Allocate variable consideration entirely to one obligation when the two criteria are met, and allocate the remainder.
- Allocate a later change in the price on the original basis and calculate the revenue to be recognised immediately.
- Record the catch-up entry that follows a change in the transaction price.