IFRS 15 ‘Revenue from Contracts with Customers’ was jointly developed by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to align revenue reporting practices under IFRS and US GAAP. The objective of the Standard is not to alter the definition of revenue, but to improve comparability by establishing a clear framework for recognizing and measuring revenue.
Our ‘Insights into IFRS 15’ series summarizes the key areas of the Standard, highlighting some areas that are challenging to apply in practice, to assist reporting entities in understanding how to apply IFRS 15’s requirements.
IFRS 15 introduced the five-step model for revenue recognition and applies specifically to contracts with customers. This article deals with Step 2 of the five-step model which covers the identification of performance obligations – the key units of account of IFRS 15.
