IFRS 15 – Omsætning fra kontrakter med kunder
Kaufmann, Nicholas Jacob
The new revenue recognition Standard IFRS 15 has jointly been developed by IASB and FASB (collectively“the Boards”) over the past decade through several individual projects and exposure drafts. The Standard
and its preceding drafts have been subject to massive critique – both positive and negative – from virtually
all stakeholders. In short, the Standard requires largely all components of revenue and related items arising
from contracts with customers to be estimated at fair value. In addition thereto, the Standard requires the
preparation of extensive disclosures on how estimates are derived and on which assumptions these
estimates have been based, along with several disclosure requirements regarding the nature, timing and
origin of revenues. These requirements may collectively necessitate an entity to rethink the way estimates
are conceived.
The Standard supersedes nearly all current legislation and guidance related to contracts with customers.
Therefore, where many IFRS-preparers have previously sought guidance through standard interpretations,
US GAAP or sector specific guidance, IFRS 15 requires an entity to apply the Standard to all sources of
revenue from contracts with customers, except those explicitly excluded from the scope of the Standard.
The current attitude towards IFRS 15 among Danish IFRS preparers is that the Standard will not have a
material effect on the financial statements, and therefore it is commonly assumed that a detailed impact
analysis of implications is not necessary to be performed. This assumption is further proclaimed as the
effective date has been deferred by the Boards until 1 January 2018, as well as the fact that the Standard is
yet to be adopted by the European Union. The purpose of this thesis is to serve as an eye-opener for those IFRS-preparers and other stakeholders,
who invariably believe that the Standard will not have a material impact on their respective entities.
Although this may or may not be the case in terms of financial statement impact, the Standard will affect
the entities in several other areas, which will require the entity to rethink their internal accounting policies,
procedures and control frameworks. Such implications may consist of, but are not limited to, determination
of estimates and assumptions for recognised revenue, allocation and recognition of variable consideration,
determination of transfer of control, tax planning, and revised investment strategies to name a few.
The thesis’ purpose is achieved through an in-depth look into the core requirements of IFRS 15 illustrated
by examples and comparisons with the current revenue recognition requirements of IAS 11/18.
Furthermore, to emphasise the level of consideration and insight required to effectively institute the
effects of the Standard, analyses of Stakeholder critique of the Standard have been prepared and
compared.
The result of the comparisons between current and future Standards and between the different
stakeholders views of implementation concerns accentuate the vast difference in perceived consequences
of the Standard. The analyses unanimously show that there are numerous elements of the Standard, which
requires an entity to deliberate application approach with management and to prepare estimates and
assumptions in a way that may be substantially different from current practice.
The Standard is expected to be adopted by the EU sometime within first half of 2016. Although effective
date may seem to be sometime in a very distant future, entities will likely benefit from analysing the effects
of the Standard already at this point, as the consequences may be more comprehensive than assumed.
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