Revenue IFRS 15

All topics related to IFRS Standards.
Post Reply
SaadOlath
Posts: 53
Joined: 22 Dec 2019, 10:50

Revenue IFRS 15

Post by SaadOlath »

Company X, Y and Z are within the same Group. The have the same Ultimate Shareholder.

Company X has an investment management agreement with Company Y. At the end of the year, performance obligation was satisfied.

However, the ultimate shareholder has instructed Company Y to pay the investment management fee to Company Z directly instead of Company Y.

Company Z will not have to reimburse this amount in the future.

Can Company Z account the investment management fee as revenue or Should it be accounted as a capital contribution (equity)?

On a separate note, Company Z does not have any investment manager licence and have no agreement with Company X & Company Y.
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: Revenue IFRS 15

Post by JRSB »

Is X the parent company of Z?
SaadOlath
Posts: 53
Joined: 22 Dec 2019, 10:50

Re: Revenue IFRS 15

Post by SaadOlath »

X is a Subsidiary as well.

The Ultimate Shareholder is an individual.
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: Revenue IFRS 15

Post by JRSB »

Is there a parent company above XY and Z, or just the individual owning all 3?
SaadOlath
Posts: 53
Joined: 22 Dec 2019, 10:50

Re: Revenue IFRS 15

Post by SaadOlath »

The individual owns all the 3 entities.
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: Revenue IFRS 15

Post by JRSB »

Ok well at it's simplest, X recognizes revenue because it has a contract and it has fulfilled it. Y has expenses.
X has effectively received payment and made a loan to Z. Either that or the debt has formally been transferred to Z.
Depends what the paperwork/minutes/documents say. Otherwise, there are various ways it could be presented.
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: Revenue IFRS 15

Post by JRSB »

PS I don't think the issue of the payment arrangements is anything to do with revenue.
Post Reply