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Clarifications to IFRS 15 Revenue from Contracts with Customers


Project History

On 28 May 2014, the IASB published IFRS 15 Revenue from Contracts with Customers. The Standard was developed jointly by the IASB and the FASB.

Shortly after the publication of IFRS 15, the IASB and the FASB announced the formation of the Joint Transition Resource Group for Revenue Recognition (TRG). The TRG informs the IASB and the FASB about potential implementation issues that could arise when companies implement the new Standard. The TRG also provides stakeholders with an opportunity to learn about the new Standard from others involved with implementation. The TRG does not issue guidance. Topics where the discussions of the TRG have highlighted potential diversity in stakeholders’ understanding of some requirements in IFRS 15 were referred to the IASB and the FASB for further consideration.

The IASB published on July 30, 2015 the Exposure Draft ED/2015/6 Clarifications to IFRS 15 (‘the Exposure Draft’).

The purpose of the Exposure Draft is to propose targeted amendments to provide clarifications with respect to identifying performance obligations, principal versus agent considerations and licensing. In addition the IASB decided to propose transition relief for modified contracts and completed contracts.

Because the Boards reached different decisions, the FASB and the IASB are each publishing separate exposure drafts. In May 2015, the FASB published its proposals related to identifying performance obligations and licenses. In August 2015, the FASB published its proposals related to principal versus agent considerations. In September 2015, the FASB published amendments relating to collectability, measuring non-cash considerations and practical expedients relating to transition and the presentation of sales taxes.

EFRAG’s Comment Letter

On 4 September 2015, EFRAG published its draft comment letter. A written procedure to approve EFRAG’s comment letter on the ED was launched with the EFRAG Board on 9 November 2015 and was concluded on 10 November 2015.

On 10 November 2015, EFRAG published its final comment letter in response to the Exposure Draft, in which EFRAG supported the IASB’s efforts to clarify IFRS 15 to help reduce potential diversity in practice that might arise upon the adoption of the Standard.

EFRAG considered the converged revenue Standard a step forward in financial reporting that will provide benefits to both preparers and users internationally. While EFRAG supported the convergence of IFRS 15 with Topic 606 Revenue from Contracts with Customers, EFRAG agreed with the IASB’s decision not to clarify certain issues where the FASB has decided to provide further guidance in the Standard. EFRAG believes that, at this stage, before the implementation of IFRS 15, the IASB should only clarify those issues that are strictly necessary for a proper understanding of IFRS 15.

Finally, EFRAG noted that the IASB should make its best effort, in collaboration with the FASB, to retain the current level of convergence. In this regard, EFRAG encouraged the IASB to continue to discuss emerging issues together with the FASB to provide a basis for reaching converged solutions.

Where divergence arises, EFRAG supported the IASB’s decision to include a discussion in the Basis for Conclusions of the potential impacts on convergence for each of the issues where either the IASB or the FASB have decided to propose amendments to the Standard.

Clarifications to IFRS 15

On 12 April 2016, the IASB issued amendments to IFRS 15, clarifying some requirements and providing additional transitional relief for companies that are implementing the new Standard.

The amendments clarify how to:

  • identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract;
  • determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and
  • determine whether the revenue from granting a licence should be recognised at a point in time or over time.

In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new Standard. The amendments have the same effective date as the Standard: 1 January 2018.

EFRAG's Endorsement Advice

On 17 May 2016, EFRAG issued  a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of Clarifications to IFRS 15 Revenue from Contracts with Customers. ​A written procedure to approve EFRAG’s draft endorsement advice on the Clarifications was launched with the EFRAG Board on 30 June 2016 and was concluded on 5 July 2016.

On 6 July 2016, EFRAG submitted its Endorsement Advice relating to the Clarifications for use in the European Union and European Economic Area. EFRAG assessed that the Clarifications meet all technical endorsement criteria of the IAS Regulation and are conducive to the European public good. It therefore recommended their endorsement. EFRAG's recommendation is explained in the letter to the European Commission and the accompanying appendices. 


Clarifications to IFRS 15 Revenue from Contracts with Customers was endorsed on 31 October 2017. It was published in the Official Journal of the European Union on 9 November 2017.

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