IFRS 15
IFRS 15 Revenue from Contracts with Customers is the international accounting standard that defines how and when companies recognize revenue. It was issued by the International Accounting Standards Board (IASB) in May 2014 and became effective for annual periods beginning on or after January 1, 2018.
Revenue Recognition
Explanation
IFRS 15 replaced earlier standards such as IAS 18 Revenue and IAS 11 Construction Contracts with a single, principles-based framework. Its core principle: a company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled.
The standard applies a five-step model: identify the contract, identify the performance obligations, determine the transaction price, allocate it, and recognize revenue when obligations are satisfied. It also requires extensive disclosures.
IFRS 15 was developed jointly with the FASB. Its US GAAP counterpart is ASC 606. The two are largely aligned but not identical.
Why It Matters
IFRS 15 often separates revenue from billing. Bundles, discounts, and multi-element contracts require allocation across performance obligations. In SAP, this is typically handled by SAP Revenue Accounting and Reporting (RAR).
Related Terms
ASC 606 · Five-Step Model · Performance Obligation · Remaining Performance Obligation (RPO) · Practical Expedient
Related Articles
• The 5-Step Model of IFRS 15 / ASC 606 Explained for SAP Teams
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