A Guide to Disclosure Requirements Under IFRS 15

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One of the main areas impacted by the new accounting standards IFRS 15 is disclosures. Businesses will be required to submit more disclosures under IFRS 15 than required under the current standards, IAS 18 Revenue and IAS 11 Constructions Contract.

IFRS 15 contains both quantitative and qualitative disclosure requirements for annual and interim periods.

IFRS 15.114-128 includes disclosure requirements on the disaggregation of revenue, contact balances, performance obligation, as well as significant judgements in the applications of the standard. The standard includes examples of categories that can be used to provide disaggregated information that will depict the nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors. An entity also discloses the relationship between the disaggregated revenue and the entity’s segment disclosures.

Examples of categories included in the standard listed are:

  • Vertical or type of customer
  • Contract duration
  • Sales channels
  • Product type or service
  • Geography
  • Timing of satisfaction of performance obligations

When determining these categories, an entity should consider how revenue is disaggregated in disclosures presented to the market or internally to company leaders to make strategic business decisions.

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New and Expanded Disclosure Requirements

Below is a list of some of the most complicated new disclosures that will require many businesses to make significant changes to their existing data gathering processes, IT systems, and internal controls.

IFRS Disclosure Requirements

116-118
The amount of revenue recognized in the current period

  • That was included in the opening contract liability balance
  • From performance obligations satisfied (including partially) in previous periods

Description of how the timing of satisfaction of the entity’s performance obligations relates to the typical payment terms and how these two factors will affect the contract assets and contract liability balances.

119-122
Leistungsverpflichtungen

  • Significant payment terms e.g. financing component, variable consideration, etc.
  • The aggregate amount of transaction price allocated to unsatisfied performance obligations (including partially). A qualitative or quantitative explanation of when the entity expects that amount to be recognized as revenue is also required.

123-126

For performance obligations satisfied over time, an entity describes the method used to recognize revenue

An entity discloses information about the methods, inputs and assumptions used to:

  • Determine the transaction price, including the variable consideration, assessment of whether the variable consideration is constrained, adjusting the consideration for financing component and measurement of non-cash consideration.
  • Measure obligations for returns and refunds, and other similar obligations.

127-128

Assets recognized from costs to obtain or fulfil a contract with a customer

Disclose the amount of amortization of these costs and amount of impairment losses recognized in the reporting period.

Describe the judgements made in determining the amount of the costs incurred to obtain or fulfil a contract and the method used to determine the amortization for each reporting period.

It’s important to note that all entities will be required to provide these disclosures irrespective of whether the new standard IFRS 15 has an impact on the timing or amount of the revenue line.

Entities will need to assess whether their current systems and processes are capable of collecting, maintaining, aggregating, and reporting the vast amount of information required to meet these disclosure requirements or consider whether it’s time to automate these requirements.

For more on how IFRS 15 impacts revenue recognition, check out our guide IFRS 15: Contract Combinations Vs Contract Modifications

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