EFRAG issues draft comment letter in response to IASB’s Request for Information on Post-implementati
EFRAG issues draft comment letter in response to IASB’s Request for Information on Post-implementati
June 2023, the IASB published a Request for Information ('RFI') on the Post-implementation Review (‘PIR’) of IFRS 15 Revenue from Contracts with Customers. EFRAG has now published its draft comment letter in response to the RFI.
In the DCL response, EFRAG notes that the Standard is generally working well in practice. However, EFRAG has identified some potential areas for targeted improvements to address the following application challenges:
In the DCL response, EFRAG notes that the Standard is generally working well in practice. However, EFRAG has identified some potential areas for targeted improvements to address the following application challenges:
- The challenges in determining whether a reporting entity is a principal or an agent which have arisen across a breadth of business models;
- The challenges in accounting for contracts involving licences;
- The challenges of applying the requirements of IFRS 15 along with the requirements of IFRS 3 Business Combinations, IFRS 16 Leases, IFRS 10 Consolidated Financial Statements, and IFRS 11 Joint Arrangements;
- The challenge of identifying performance obligations related to contracts with upfront fees, pre-production services, and those involving licences; and
- The challenge in determining the transaction price in respect of the requirements for the estimation of variable consideration and the treatment of ‘negative’ revenue.