What does distinct mean in IFRS 15?
good or service
The good or service is distinct within the context of the contract. It means that the good or a service is separately identifiable from other promises in the contract.
What does IFRS 15 say?
IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with earlier application permitted. IFRS 15 establishes the principles that an entity applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer.
What is a distinct good?
What are ‘distinct’ goods and services? A good or service that is promised to a customer is ‘distinct’ if both of the following criteria are met: The customer can benefit from the good or service either on its own, or together with other resources that are readily available to the customer, and.
How does IFRS 15 determine whether the good or service is distinct?
A good or service is distinct if both of the following criteria are met (IFRS 15.27): the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (in other words: the good or service is capable of being distinct); and.
Is rental income IFRS 15?
An arrangement between a lessor and a lessee under which property is leased, and additional services are provided by the lessor is bifurcated into two elements, so that IAS 17/IFRS 16 is applied to the lease income, and IFRS 15 is applied to the service revenue earned. IFRS 15 applies only to contracts with customers.
How is revenue recognized?
GAAP (generally accepted accounting principles) require that revenues are recognized according to the revenue recognition principle, a feature of accrual accounting. This means that revenue is recognized on the income statement in the period when realized and earned—not necessarily when cash is received.
What are the two criteria to define a good or service as distinct?
There are two criteria for a good or service to be considered distinct, and both of those criteria must be met. The good or service must be capable of being distinct, and it must be distinct in the context of the contract.
Does IFRS 15 apply to insurance companies?
Although the new revenue standard does not apply to insurance contracts, it may apply to other arrangements – such as asset management, insurance broking, pension administration, claims handling or custody services.