IASB and FASB have issued IFRS 15 in May 2014 applying to annual reporting period beginning on or after 1 January 2018, but earlier application is permitted.
The IFRS has identified a five step model framework, which considers performance objectives and transaction price. The objective of IFRS 15 is to clarify the principles of recognising revenue, how and when to recognise the revenue, as well as requiring the entities to provide users of financial statements with more informative and relevant disclosures.
The core principle of IFRS 15 is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is delivered in a five-step model framework: Identify the contract(s) with a customer Identify the performance obligations in the contract Determine the transaction price Allocate the transaction price to the performance obligations in the contract Recognise revenue when (or as) the entity satisfies a performance obligation. Application of this guidance will depend on the facts and circumstances present in a contract with a customer and will require the exercise of judgment.