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Revenue Recognition Navigator

IFRS 15 requires entities to follow a five-step model to determine when and how much revenue to recognise.

This navigator guides you through each step — from identifying the contract with a customer (paragraph 9) to recognising revenue when performance obligations are satisfied (paragraph 31) — and flags common judgment areas including variable consideration, principal vs agent, and licences.

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Step 1Identify the contract

Is there a valid contract with a customer?

A contract must meet all five criteria: (1) parties have approved it; (2) each party's rights are identifiable; (3) payment terms are identifiable; (4) it has commercial substance; (5) it is probable that the entity will collect the consideration. If the criteria are not met, revenue is recognised only when consideration received is non-refundable and no remaining performance obligations exist (IFRS 15 §15).
Reference: IFRS 15 §9

How it works

You describe your contract — the nature of goods or services, payment terms, variable consideration, and any bundled arrangements.

The navigator applies the IFRS 15 five-step model to identify distinct performance obligations, determine the transaction price (including estimation of variable amounts under the constraint in paragraph 56), allocate the price using standalone selling prices, and conclude whether each obligation is satisfied over time or at a point in time.

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