IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with earlier application permitted.
IFRS 15 establishes the principles that an entity applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer. Applying IFRS 15, an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
To recognise revenue under IFRS 15, an entity applies the following five steps:
In April 2001 the International Accounting Standards Board (Board) adopted IAS 11 Construction Contracts and IAS 18 Revenue, both of which had originally been issued by the International Accounting Standards Committee (IASC) in December 1993. IAS 18 replaced a previous version: Revenue Recognition (issued in December 1982). IAS 11 replaced parts of IAS 11 Accounting for Construction Contracts (issued in March 1979).
In December 2001 the Board issued SIC‑31 Revenue—Barter Transactions Involving Advertising Services. The Interpretation was originally developed by the Standards Interpretations Committee of the IASC to determine the circumstances in which a seller of advertising services can reliably measure revenue at the fair value of advertising services provided in a barter transaction.
In June 2007 the Board issued IFRIC 13 Customer Loyalty Programmes. The Interpretation was developed by the IFRS Interpretations Committee (the ‘Interpretations Committee’) to address the accounting by the entity that grants award credits to its customers.
In July 2008 the Board issued IFRIC 15 Agreements for the Construction of Real Estate. The Interpretation was developed by the Interpretations Committee to apply to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors.
In January 2009 the Board issued IFRIC 18 Transfers of Assets from Customers. The Interpretation was developed by the Interpretations Committee to apply to the accounting for transfers of items of property, plant and equipment by entities that receive such transfers from their customers.
In May 2014 the Board issued IFRS 15 Revenue from Contracts with Customers, together with the introduction of Topic 606 into the Financial Accounting Standards Board’s Accounting Standards Codification®. IFRS 15 replaces IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC‑31. IFRS 15 provides a comprehensive framework for recognising revenue from contracts with customers.
In September 2015 the Board issued Effective Date of IFRS 15 which deferred the mandatory effective date of IFRS 15 to 1 January 2018.
In April 2016 the Board issued Clarifications to IFRS 15 Revenue from Contracts with Customers clarifying the Board’s intentions when developing some of the requirements in IFRS 15. These amendments do not change the underlying principles of IFRS 15 but clarify how those principles should be applied and provide additional transitional relief.
In May 2017, the Board issued IFRS 17 Insurance Contracts which permits an entity to choose whether to apply IFRS 17 or IFRS 15 to specified fixed-fee service contracts that meet the definition of an insurance contract.
Other Standards have made minor consequential amendments to IFRS 15, including IFRS 16 Leases (issued January 2016) and Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018).