Disclosures

Learning objectives

• Identify the disclosures required: disaggregation of revenue, contract balances, performance obligations, transaction price allocated to the remaining obligations, significant judgements, assets recognised for contract costs, practical expedients applied.L2, L3
• Prepare a note disaggregating revenue and the information on remaining performance obligations.L3, L4

Normative references

• IFRS 15 §110The disclosure objective is to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers; to that end, the entity discloses qualitative and quantitative information about its contracts, its significant judgements and its assets recognised for contract costs.
• IFRS 15 §111The entity considers the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each requirement, aggregating or disaggregating so that useful information is not obscured and items with substantially different characteristics are not combined.
• IFRS 15The entity need not disclose information required by IFRS 15 if it has already provided it in accordance with another standard.
• IFRS 15Unless those amounts are presented separately in the statement of comprehensive income in accordance with other standards, the entity discloses for the period revenue recognised from contracts with customers, separately from its other sources of revenue, and impairment losses (under IFRS 9) recognised on receivables or contract assets arising from those contracts, separately from impairment losses on other contracts.
• IFRS 15 §114The entity disaggregates revenue from contracts with customers into categories that depict how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows, drawing on the guidance in paras. B87 to B89.
• IFRS 15If the entity applies IFRS 8, it discloses sufficient information to enable users to understand the relationship between the disaggregated revenue under para. 114 and the revenue information disclosed for each reportable segment.
• IFRS 15 §116The entity discloses the opening and closing balances of receivables, contract assets and contract liabilities (if not otherwise presented), revenue recognised in the period that was included in the contract liability balance at the beginning of the period, and revenue recognised in the period from performance obligations satisfied in previous periods (for example, changes in transaction price).
• IFRS 15 §117The entity explains, possibly qualitatively, how the timing of satisfaction of its performance obligations relates to the typical timing of payment and the effect that those factors have on the contract asset and contract liability balances.
• IFRS 15 §118The entity explains, with qualitative and quantitative information, the significant changes in contract assets and contract liabilities during the period, for example those arising from business combinations, cumulative catch-up adjustments, impairments or changes in time frames.
• IFRS 15 §119The entity describes its performance obligations: when they are typically satisfied, significant payment terms (financing component, variable consideration and its constraint), the nature of the goods or services promised (highlighting cases in which it acts as an agent), obligations for returns or refunds, and warranties.
• IFRS 15 §120The entity discloses the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period and explains, quantitatively or qualitatively, when it expects to recognise that amount as revenue.
• IFRS 15 §121The information in para. 120 may be omitted for a performance obligation that is part of a contract with an original expected duration of one year or less, or for which revenue is recognised in accordance with para. B16 (right to invoice an amount that corresponds directly with the value delivered).
• IFRS 15 §122The entity discloses qualitatively whether it is applying the practical expedient in para. 121 and whether any consideration is not included in the transaction price and, therefore, not in the information in para. 120 (for example, constrained variable consideration).
• IFRS 15 §123The entity discloses the judgements, and changes in the judgements, that significantly affect the amount and timing of revenue, in particular those relating to the timing of satisfaction of performance obligations and to the determination of the transaction price and its allocation.
• IFRS 15 §124For performance obligations satisfied over time, the entity describes the methods used to recognise revenue (output or input methods and how they are applied) and explains why they provide a faithful depiction of the transfer of goods or services.
• IFRS 15 §125For performance obligations satisfied at a point in time, the entity discloses the significant judgements made in evaluating when the customer obtains control of the promised goods or services.
• IFRS 15 §126The entity discloses the methods, inputs and assumptions used to determine the transaction price (including estimating variable consideration), to assess whether an estimate of variable consideration is constrained, to allocate the transaction price (including estimating stand-alone selling prices) and to measure obligations for returns, refunds and other similar obligations.
• IFRS 15 §127The entity describes the judgements made in determining the amount of the costs incurred to obtain or fulfil a contract that are capitalised and the method it uses to determine the amortisation for each reporting period.
• IFRS 15 §128The entity discloses the closing balances of assets recognised from the costs incurred to obtain or fulfil a contract, by main category (for example, costs to obtain contracts, pre-contract costs, set-up costs), and the amortisation and impairment losses recognised in the period.
• IFRS 15 §129An entity that elects to use the practical expedient in para. 63 (financing component) or para. 94 (incremental costs of obtaining a contract) discloses that fact.
• IFRS 15Paragraph 114 requires revenue to be disaggregated into categories that depict how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows; the extent of disaggregation depends on the facts and circumstances of the entity's contracts, and more than one type of category may be needed.
• IFRS 15In selecting the categories for disaggregation, the entity considers how information about its revenue has been presented for other purposes, in particular in disclosures presented outside the financial statements (earnings releases, annual reports, investor presentations) and in information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments.
• IFRS 15The standard gives a non-exhaustive list of examples of categories for disaggregation, including the type of good or service and the geographical region.

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

19 questions

• The Quintal group earns revenue from contracts with customers and rentals received as a lessor; these two sources are not presented separately in the statement of comprehensive income. Quintal must disclose in the notes the revenue from contracts with customers separately from its other sources of revenue.L2
• Rivolex does not present separately, in the statement of comprehensive income, the impairment losses on receivables and contract assets arising from its contracts with customers. In the notes, it may group them with the impairment losses on its other contracts, without distinction.L2
• What is the objective of disaggregating revenue from contracts with customers?L2
• Sondral is preparing the note disaggregating its revenue. Which items must it consider or may it use to choose its categories?L3
• The Tavernel group applies IFRS 8 and presents three segments based on regions. Its note disaggregating revenue, prepared in accordance with paragraph 114, uses product lines that do not match those segments. What does IFRS 15 require?L3
• Ulmera, which does not present or disclose these amounts elsewhere, must disclose the opening and closing balances of its receivables, contract assets and contract liabilities from contracts with customers.L2
• At 1 January 20X2, Velorin's contract liability amounts to 80,000. In 20X2, Velorin receives new advances of 120,000 and recognises total revenue of 900,000. Of this revenue, 65,000 relates to performance covered by the opening contract liability and 70,000 to performance covered by advances received during the year. What amount does Velorin disclose as revenue of the period that was included in the contract liability at the beginning of the period?L3
• Wendal completed the construction of a structure in 20X1, a performance obligation fully satisfied at the end of 20X1; the completion bonus had been neither invoiced nor collected. In 20X2, the uncertainty over a completion bonus is resolved and Wendal recognises additional revenue of 30,000 (case data). What information does Wendal give about this amount in its 20X2 notes?L3
• The contract assets and contract liabilities of the Xantis group changed significantly in 20X2. Which items are examples of expected explanations of these significant changes?L3
• Yselis operates an online marketplace and acts as an agent for part of the sales made on its platform. In the description of its performance obligations, it need not highlight the cases in which it acts as an agent.L2
• On 1 January 20X1, Zephal signs a 3-year maintenance contract for a transaction price of 900,000; the performance obligation is satisfied over time and evenly. At 31 December 20X1, Zephal has recognised revenue of 300,000 and expects to recognise 300,000 in 20X2 and 300,000 in 20X3. What information does Zephal give on the remaining performance obligations?L3
• At 31 December 20X1, Abrenne has three contracts in progress. Contract 1: original expected duration of 10 months, remaining transaction price to be recognised 50,000. Contract 2: duration of 3 years, remaining transaction price 400,000. Contract 3: duration of 2 years, remaining transaction price 120,000; a potential bonus of 30,000 is excluded from it because of the constraint on variable consideration. Abrenne elects to apply the practical expedient that allows the information to be omitted for contracts with an original expected duration of one year or less. What information does it give on the transaction price allocated to the remaining performance obligations?L4
• Brivail is considering the extent of the judgements to be disclosed for its contracts with customers. Which statement is correct?L3
• Calmeyre carries out construction projects whose performance obligations are satisfied over time; it measures progress using an input method (costs incurred). In its notes, it must describe this method and explain why it provides a faithful depiction of the transfer of goods or services to the customer.L3
• Dauphal sells industrial ovens; each performance obligation is satisfied at a point in time. An acceptance clause makes it difficult to assess when the customer obtains control: on shipment or after on-site testing. What information must Dauphal give on this matter?L3
• Elvinor grants volume rebates, sells bundled offers and accepts returns. For which matters must it disclose the methods, inputs and assumptions used?L3
• Fontebrune has recognised as assets sales commissions and set-up costs relating to its contracts with customers. Which set of information must it give about these assets?L3
• Gardenne elects to recognise as an expense when incurred the incremental costs of obtaining contracts whose asset would have been amortised over one year or less. As this choice is merely a practical expedient, Gardenne need not mention it in its notes.L2
• The Hermanel group sells laboratory equipment and multi-year maintenance contracts. Its investor presentations analyse revenue by product line (equipment, maintenance) and by region (Europe, North America). Its chief operating decision maker monitors the performance of two segments based on these regions, and Hermanel applies IFRS 8. The group has about 400 active contracts. Which note disaggregating revenue is most appropriate?L4