In one sentenceRules that determine when revenue is recorded and at what amount, under IFRS 15: when the business satisfies its obligation to the customer, not when cash is received.
Simply put
The standard is built on five steps: identify the contract, then the performance obligations in it, then the transaction price, then allocate the price to the obligations, then recognize revenue when each obligation is satisfied or over the period it is satisfied.
The practical result: an amount received in advance for a service not yet provided is not yet revenue, but deferred revenue.
Worked example
A maintenance company received 24,000 SAR at the beginning of January for a one-year maintenance contract. What is the revenue by the end of March?
Monthly revenue = 24,000 ÷ 122,000
Months elapsed3
Remaining as deferred revenue = 24,000 − 6,00018,000
Revenue to the end of March = 2,000 × 36,000 SAR
Don't confuse it with
CashReceiving cash does not mean revenue has been earned; what counts is providing the service or delivering the goods.
in FullScreen ERP
The loyalty points module records an automatic entry for the points liability when points are earned and redeemed. Customer loyalty points