What is the core principle?
Recognise revenue to depict the transfer of promised goods or services to customers, in an amount that reflects the consideration the company expects to be entitled to. Two ideas sit inside that sentence: revenue follows the transfer of control, not the receipt of cash; and the amount is what the company expects to be entitled to, which may differ from the list price.
What are the five steps?
Each step has its own guide: the five-step model with examples, identifying performance obligations, variable consideration, allocating the transaction price and principal or agent.
What does IFRS 15 cover?
All contracts with customers, except those covered by other standards: leases (IFRS 16), insurance contracts (IFRS 17), financial instruments (IFRS 9 and related standards), and some non-monetary exchanges between companies in the same line of business. A customer is a party that has contracted to obtain goods or services from the company's ordinary activities in exchange for consideration.
Over time or at a point in time?
A performance obligation is satisfied over time if any of three conditions is met: the customer receives and uses the benefit as the company performs, as with a cleaning contract; the company's work creates or improves an asset the customer controls, as with building on the customer's land; or the work creates an asset with no alternative use to the company and the company has an enforceable right to payment for work done so far. Otherwise revenue is recognised at the point in time when control passes, usually on delivery.
What are contract assets and contract liabilities?
| Balance | When it arises | Example |
|---|---|---|
| Receivable | The company has an unconditional right to payment, needing only time to pass | An invoice due in 30 days |
| Contract asset | The company has performed but its right to payment depends on something else | A handset delivered, paid for through future monthly charges |
| Contract liability | The customer has paid, or payment is due, before the company performs | An annual subscription paid upfront |
A worked example
On 1 July 2026 a software company signs a one-year contract for CU 12,000, paid upfront, giving the customer access to its hosted platform. Access is a single service provided over time, so revenue is recognised evenly:
| Date | Entry | CU |
|---|---|---|
| 1 July 2026 | Dr Cash, Cr Contract liability | 12,000 |
| Each month | Dr Contract liability, Cr Revenue | 1,000 |
| 31 December 2026 | Revenue for the year, with a contract liability remaining | 6,000 and 6,000 |
The Revenue allocation calculator (Excel) produces this kind of month-by-month schedule for any mix of goods and services.
Where does IFRS 15 need the most judgement?
| Industry | The hard question |
|---|---|
| Telecom | Splitting bundled handsets and service plans |
| Software | Licence or service (see licences of intellectual property), implementation work, and sales commissions (see contract costs) |
| Construction and engineering | Measuring progress on long contracts, and claims and variations |
| Consumer goods | Rebates, promotions and payments to retailers |
| Online platforms | Whether the company is principal or agent |
What do companies disclose?
Revenue broken down into categories that show how economic factors affect it, such as by product line or geography; opening and closing contract balances and what moved them; the remaining performance obligations still to be satisfied; and the significant judgements made in applying the standard.
How does it compare with US GAAP?
IFRS 15 and ASC 606 were developed together and use the same five steps. The remaining differences are small and mostly in licences, some practical expedients and certain disclosures for non-public companies; see IFRS 15 vs ASC 606. See IFRS vs US GAAP: the key differences.
Need help applying the standards?
Our Chartered Accountants help finance teams and students apply IFRS and US GAAP to real transactions.
Questions people ask
What is the core principle of IFRS 15?
Recognise revenue when control of promised goods or services passes to the customer, at the amount the company expects to be entitled to.
When did IFRS 15 become effective?
For annual periods beginning on or after 1 January 2018.
What did IFRS 15 replace?
IAS 18 Revenue, IAS 11 Construction Contracts and several related interpretations.
Is IFRS 15 the same as ASC 606?
Substantially. They share the five-step model, with a small number of differences.
Sources
Every fee, date and rule on this page was taken from these official and primary sources.
Rules and fees change. If you are reading this long after October 4, 2026, confirm the figures with the source before you rely on them.
Related guides
More in IFRS 15
This guide is general information. It is not tax or legal advice for your situation.