Insights into PFRS 15 – Step 3: Determining the transaction price
For most entities, revenue is one of the most important indicators of performance. Ensuring revenue recognition principles are applied consistently and comparably across industries and capital markets is essential.
IFRS 15 ‘Revenue from Contracts with Customers’ was jointly developed by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to align revenue reporting practices under IFRS and US GAAP. The objective of the standard is not to alter the definition of revenue, but to improve comparability by establishing a clear framework for recognizing and measuring revenue.
Our ‘Insights into PFRS 15’ series outlines the key aspects of the Standard, drawing attention to areas that are particularly difficult to apply in practice, with the aim of helping reporting entities better understand and implement PFRS 15’s requirements. PFRS 15 introduced the five-step model for revenue recognition from contracts with customers. This article deals with Step 3 of the five-step model, which covers determining the transaction price.
The full publication is accessible and downloadable below.
The previous releases in this series, which provide foundational discussions on earlier steps and key concepts under PFRS 15, are available below:
