Apply the IFRS 15 five-step revenue model to a bundled customer contract.
A customer pays $120,000 upfront for software access, onboarding, and support. Stand-alone selling prices are $96,000 for annual access, $18,000 for onboarding, and $6,000 for support. IFRS 15 five-step revenue model The common shortcut is to equate invoice or cash receipt with revenue. That front-loads revenue before distinct promises have transferred to the customer. 1. Identify promises The contract includes software access, onboarding, and support. Each promise is assessed for whether it is distinct. Revenue starts with promised goods and services, not invoice lines. 2. Allocate price Total stand-alone selling price is $120,000, so the transaction price allocates $96,000 to…
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