IFRS 15Chapter 6Lesson 3
Contract modifications
Step 1 of 8Learning objectives
Go deeper+2 deeper insights · +1 calculation · +1 journal entry · +1 point of attention
When the parties approve a change in scope or price, three treatments are possible: a separate contract (distinct goods added at their stand-alone selling price), a prospective treatment (the rest of the contract restarts on a new basis) or a cumulative catch-up (the modification becomes part of an obligation in progress). An approved modification whose price has not yet been set is estimated as variable consideration.
30 minNot started
Learning objectives
- Recognise an approved contract modification, including when the price is disputed or not yet set.
- Determine whether a modification is a separate contract (two conditions).
- Choose between prospective treatment and cumulative catch-up depending on whether the remaining goods or services are distinct.
- Calculate and record the effects of each treatment.