Disclosure requirements relating to contracts with customers are set out in paragraphs IFRS 15.110-128; B87-B89. As these disclosure requirements are quite extensive and some of them are not relevant for all entities, the IASB made it clear that the disclosure requirements should not be treated as a checklist, but instead considered in the light of IFRS 15’s disclosure objective and materiality (IFRS 15.110-112, BC331).
Disclosure requirements can be grouped into the following major categories:
- contracts with customers (IFRS 15.113),
- disaggregation of revenue (IFRS 15.114-115),
- contract balances (IFRS 15.116-118),
- performance obligations (IFRS 15.119-122),
- significant judgements made (IFRS 15.123-126),
- contract costs recognised as assets (IFRS 15.127-128),
- practical expedients (IFRS 15.129).
Contracts with customers
IFRS 15 requires revenue and impairment losses arising from contracts with customers to be disclosed separately from items not arising from contracts with customers. For example, entities with material leasing revenue will have to separate leasing revenue recognised under IFRS 16 from revenue from contracts with customers recognised under IFRS 15.
Disaggregation of revenue
Paragraph IFRS 15.114 requires disclosure of disaggregated revenue from contracts with customers with application guidance provided in IFRS 15.B87-B89. Obviously, there is no predetermined list of revenue categories to be presented. Instead, IFRS 15 states that entities should take into account how the information about revenue is presented in other external (e.g. investor presentations) and internal financial communication (management reports). IFRS 15.B87 also notes that some entities may need to use more than one type of category to meet the disclosure objective. See also Example 41 accompanying IFRS 15.
Disaggregation of revenue is also required by IAS 34 in interim financial reports. This is the only IFRS 15 requirement applicable to interim financial statements.
Requirements set out in paragraphs IFRS 15.116-118 are aimed to facilitate understanding of the relationship between the revenue recognised in a reporting period and changes in contract balances (IFRS 15.BC341).
Disclosure requirements relating to performance obligations are included in paragraphs IFRS 15.119-122. They require entities to explain specifically how they typically satisfy their performance obligations, what the payment terms, warranties or refund liabilities are. Additionally, entities are required to disclose so called ‘backlog’, which is the amount of transaction price allocated to the remaining performance obligations.
See also Examples 42 and 43 accompanying IFRS 15.
Significant judgements made
Paragraphs IFRS 15.123-126 include specific requirements regarding disclosure of judgements made when applying IFRS 15. Although IAS 1 already requires disclosure of judgements and estimates, the IASB decided to provide specific requirements concerning revenue because of the importance placed on revenue by users of financial statements (IFRS 15.BC355).
More about IFRS 15
See other pages relating to IFRS 15:
Identify a Contract
Performance Obligations and Timing of Revenue Recognition
Principal vs Agent, or Reporting Revenue Gross vs Net
Revenue from Licensing of Intellectual Property
Revenue from Customers’ Unexercised Rights (Breakage)
Customer Loyalty Programmes and Other Options for Additional Goods or Services
Contract Assets and Contract Liabilities