Defined terms

Learning objectives

• Explain in one's own words contract, customer, performance obligation, transaction price, stand-alone selling price, revenue, contract asset and contract liability.L1, L2

Normative references

• IFRS 15Appendix A defines the key terms: contract (an agreement between two or more parties that creates enforceable rights and obligations); contract asset (a right to consideration in exchange for goods or services transferred, conditioned on something other than the passage of time); contract liability (an obligation to transfer goods or services for which consideration has been received or is due); customer (a party that has contracted to obtain, in exchange for consideration, goods or services that are an output of the entity's ordinary activities); income (increases in economic benefits that result in increases in equity, other than contributions from holders of equity claims); performance obligation (a promise to transfer a distinct good or service, or a series of distinct goods or services that are substantially the same and have the same pattern of transfer); revenue (income arising in the course of ordinary activities); stand-alone selling price (the price at which the entity would sell the good or service separately); transaction price (the consideration to which the entity expects to be entitled in exchange for the goods or services, excluding amounts collected on behalf of third parties).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

12 questions

• For the purposes of IFRS 15, a contract is an agreement between two or more parties that creates enforceable rights and obligations.L1
• A contract asset is a right to consideration whose payment is due solely on the passage of time.L1
• According to Appendix A of IFRS 15, what is a performance obligation?L1
• Ambrel sells a set of furniture to a customer. The invoice amounts to 12,000, including 2,000 of sales tax that Ambrel collects on behalf of the State (case datum). What is the transaction price?L1
• How does Appendix A of IFRS 15 define the stand-alone selling price of a good or service?L1
• Which of the following statements about income and revenue (Appendix A of IFRS 15) are correct?L1
• At 31 December 20X1, Néroli has issued an invoice that is due for a service it will only perform in 20X2; the customer has not yet paid. Néroli presents a contract liability at that date.L2
• Natéo manufactures and sells bicycles. Which of the following parties is a customer of Natéo as defined in IFRS 15?L2
• In which of the following situations does the entity hold a contract asset rather than a receivable?L2
• During 20X1, Corvalis receives 500,000 from its shareholders in a capital increase, and makes 300,000 of sales of goods arising from its ordinary activities, of which the customers have obtained control. What amount is revenue?L2
• The transaction price is always equal to the price stated in the contract signed with the customer.L2
• On 10 November 20X1, Pélagie delivers pumps to a customer, which obtains control of them, and issues an invoice of 30,000 payable within 60 days. No other condition is attached to payment. What item does Pélagie present for this right at 30 November 20X1?L2