Non-cash consideration and consideration payable to a customer

Learning objectives

• Measure non-cash consideration at fair value (or, failing that, by reference to the stand-alone selling price of the goods or services promised).L2, L3
• Determine whether consideration payable to a customer reduces the transaction price or is payment for a distinct good or service received from the customer, and when the reduction is recognised.L2, L3

Normative references

• IFRS 15 §66When the customer promises consideration in a form other than cash, the entity measures it at fair value to determine the transaction price.
• IFRS 15If the fair value of the non-cash consideration cannot be reasonably estimated, the entity measures it indirectly by reference to the stand-alone selling price of the goods or services promised to the customer.
• IFRS 15The fair value of non-cash consideration may vary because of its form (for example, the price of a share to be received); if it varies for reasons other than only its form, the entity applies the constraint in paragraphs 56 to 58.
• IFRS 15If the customer contributes goods or services (materials, equipment, labour) to facilitate fulfilment of the contract, the entity assesses whether it obtains control of them; if so, it accounts for them as non-cash consideration received from the customer.
• IFRS 15 §70Consideration payable to a customer (cash amounts paid or payable to the customer or to subsequent purchasers, as well as credits, vouchers or coupons that can be applied against amounts owed) is accounted for as a reduction of the transaction price, unless it is payment for a distinct good or service supplied by the customer. If it includes a variable amount, the entity applies paragraphs 50 to 58.
• IFRS 15 §71If consideration payable to a customer is payment for a distinct good or service, the entity accounts for the purchase in the same way as other purchases from suppliers. If the amount paid exceeds the fair value of the good or service received, the excess reduces the transaction price; if that fair value cannot be reasonably estimated, the entire amount reduces the transaction price.
• IFRS 15 §72When consideration payable to a customer reduces the transaction price, the reduction of revenue is recognised at the later of: recognition of revenue for the related goods or services, and the entity paying or promising to pay (even if conditional, and including a promise implied by customary business practices).

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

15 questions

• Ingénova designs a production line for a customer for a fixed price of EUR {fixed_fee}. A bonus of EUR {bonus} will be due if the line is delivered before an agreed date; only two outcomes are possible. Ingénova estimates the bonus using the most likely amount, which is earning the bonus, and concludes, based on its judgement, that it is highly probable that including it will not result in a significant reversal of cumulative revenue. The contract also provides that Ingénova pays the customer EUR {payment_to_customer} as a contribution to fitting out its premises, without receiving any distinct good or service in exchange. Compute the transaction price.L3
• Brasselin sells a batch of professional ovens to a restaurant chain. In exchange, the chain pays EUR {cash_price} and transfers to Brasselin a commercial vehicle with a fair value of EUR {vehicle_fair_value}. Under the same contract, Brasselin grants the chain a credit note of EUR {credit_granted} that can be applied against its next invoices, without receiving any distinct good or service in exchange. Compute the transaction price.L3
• Fargues receives a utility vehicle from a customer as payment for fit-out works. To determine the transaction price, it uses the carrying amount of the vehicle in the customer's books.L2
• The architecture firm Ventadour designs the extension of an art gallery and receives in exchange a unique work of art whose fair value cannot be reasonably estimated. How does it measure the consideration received?L2
• The consultancy Arvel assists the listed company Solenne with a restructuring. It receives cash fees of {cash_fee} and {shares_received} Solenne shares, whose fair value per share at the measurement date used is {fair_value_per_share} (case data). Compute the transaction price.L2
• The coachbuilder Ostal manufactures a refrigerated truck for Glacière for {cash_price} in cash. Glacière supplies the chassis, of which Ostal obtains control (given conclusion), with a fair value of {chassis_fair_value}. It also lends Ostal a test bench with a fair value of {tool_fair_value}, which it will take back on delivery and of which Ostal does not obtain control. Compute the transaction price.L3
• Brumaire provides IT support for {support_months} months to a young biotechnology company. In exchange, it receives no cash but a licence to use an unlisted patent, whose fair value cannot be reasonably estimated (case data). The stand-alone selling price of the support is {monthly_ssp} per month. Determine the transaction price.L3
• For some contracts, Tarnos receives non-cash consideration. Which statements are correct?L3
• The biscuit maker Lanvaux pays the retail chain Primavera, its customer, a contribution of 15,000 for listing its products, without receiving any distinct good or service in exchange. Lanvaux recognises this amount as a selling expense.L2
• Morgat manufactures cleaning products sold to supermarkets, which resell them to consumers. Which of the following is consideration payable to a customer?L2
• In 20X1, the fruit juice maker Laurac delivers products invoiced at {gross_sales} to the store chain Distrimax. To obtain new shelf space, it pays Distrimax {listing_fee} during the year, without receiving any distinct good or service (given conclusion). Compute the revenue for 20X1 from this contract.L2
• The brewery Cantal sells beer worth {sales_to_retailer} to the retailer Marchéo in 20X1. It pays Marchéo {payment_for_advertising} for a poster campaign in its stores, a distinct service whose fair value, reasonably estimated, is {fair_value_of_service} (case data). Compute the revenue for 20X1 and the amount recognised as a purchase of the advertising service.L3
• The publisher Kerjean pays 40,000 to a distributor customer for footfall data from its outlets. Kerjean concludes that this is a distinct service but cannot reasonably estimate its fair value. How should the 40,000 be treated?L3
• The cheese maker Salers sold cheese to the purchasing group Alpina in March 20X1 and recognised the related revenue. In September 20X1, following a commercial renegotiation, it promises Alpina a payment of 6,000 without receiving any distinct good or service; it previously had no customary practice or intention of doing so (case data). The payment will be made in December 20X1. When does Salers recognise the reduction of revenue?L3
• On 1 March 20X1, the dairy Aubrac announces a campaign of discount coupons that consumers can use on its yoghurts bought in stores between April and June. The yoghurts concerned will be sold to distributors, Aubrac's customers, from April to June; the number of coupons that will be used is uncertain. When and how does Aubrac recognise the reduction of revenue?L3