Scope and contracts partly within other standards

Learning objectives

• Identify the contracts excluded from the scope (leases, insurance contracts, financial instruments and other contractual rights or obligations within the scope of other standards, non-monetary exchanges between entities in the same line of business to facilitate sales).L1, L2
• Determine the treatment of a contract that is partly within the scope of another standard: first apply the separation or measurement requirements of that standard, then IFRS 15 to the remainder.L2, L3
• Identify that consideration is within the scope only if it comes from a customer, i.e. a party that has contracted to obtain goods or services that are an output of the entity's ordinary activities.L1, L2

Normative references

• IFRS 15 §3The entity considers the terms of the contract and all relevant facts and circumstances; it applies the standard, including its practical expedients, consistently to contracts with similar characteristics and in similar circumstances.
• IFRS 15 §5Excluded are: (a) leases within the scope of IFRS 16; (b) contracts within the scope of IFRS 17, although the entity may elect to apply IFRS 15 to certain insurance contracts whose primary purpose is the provision of services for a fixed fee (IFRS 17, para. 8); (c) financial instruments and other contractual rights or obligations within the scope of IFRS 9, IFRS 10, IFRS 11, IAS 27 and IAS 28; (d) non-monetary exchanges between entities in the same line of business to facilitate sales to customers.
• IFRS 15 §6The standard applies only if the counterparty to the contract is a customer, i.e. a party that has contracted with the entity to obtain, in exchange for consideration, goods or services that are an output of the entity's ordinary activities. A counterparty that participates in an activity in which the parties share the risks and benefits (collaborative development of an asset), rather than obtaining its output, is for example not a customer.
• IFRS 15 §7When a contract is partly within the scope of IFRS 15 and partly within the scope of other standards (para. 5), the entity first applies the separation and/or initial measurement requirements of those other standards, excludes from the transaction price the amount so measured and allocates any remaining amount in accordance with paras. 73 to 86. If the other standards do not specify how to separate or measure, the entity applies IFRS 15 to that separation or initial measurement.
• IFRS 15 §8The standard also governs the incremental costs of obtaining a contract and the costs to fulfil a contract that are not within the scope of another standard (cross-reference to paragraphs 91 to 104), only for costs relating to a contract (or part of a contract) within the scope of IFRS 15.

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

13 questions

• A lease within the scope of IFRS 16 is excluded from the scope of IFRS 15.L1
• Two fuel distributors that exchange volumes of fuel with each other, in order to better serve their respective customers in different regions, account for this exchange under IFRS 15.L1
• Orlane, a manufacturer of coffee machines, signs several agreements during the year. Which one is within the scope of IFRS 15?L1
• Which of the following contracts are excluded from the scope of IFRS 15?L1
• Végéa and Montelor University jointly develop a new seed variety; they share the costs, risks and benefits of the project. For Végéa, Montelor is a customer as defined in IFRS 15.L2
• Kalidor, a contract research laboratory, signs two agreements: (1) with Pharmeo, which pays it a fixed fee to carry out a series of trials and receive all of the results; (2) with Biomont, with which it develops a process sharing the costs, risks and future profits. Which agreement(s) is (are) within the scope of IFRS 15 for Kalidor?L2
• Tramex makes a truck available to a customer under a contract that includes a lease component within the scope of IFRS 16, and also provides full maintenance of the vehicle. The contract provides for a single overall price. How should Tramex proceed?L2
• Oxalis enters into a contract with a customer of which one component is within IFRS 15 and another is within another standard. It is established (case datum) that this other standard specifies neither how to separate this component nor how to measure it initially. How does Oxalis proceed for the separation and initial measurement?L3
• A contract is partly within IFRS 15 and partly within another standard that specifies how to separate and measure the component it governs. Which statements are correct?L2
• Rubane sells standard maintenance contracts to similar customers, in similar circumstances. It may apply an IFRS 15 practical expedient to some of these contracts and not to others, on a case-by-case basis.L2
• Immovia, whose ordinary activities include leasing warehouses, pays a commission to an intermediary to obtain the signing of a lease within the scope of IFRS 16. Do the IFRS 15 requirements on incremental costs of obtaining a contract apply to this commission?L2
• Valtech enters into an overall contract of 100,000 with a customer for making an industrial printer available (a lease component within the scope of IFRS 16) and for an operator training service. Applying the requirements of IFRS 16, the amount attributed to the lease component is 60,000 (case datum). What amount is the transaction price to be accounted for under IFRS 15?L3
• Datavia, a software publisher, signs with Merko: (1) a contract under which Merko pays a fixed price to obtain a custom-developed invoicing module that it alone will use; (2) a separate agreement under which the two companies jointly develop a shared platform, sharing the costs, risks and future revenues. How does Datavia analyse these agreements with regard to the scope of IFRS 15?L2