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- This topic has 5 replies, 2 voices, and was last updated 6 years ago by MikeLittle.
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- July 18, 2017 at 3:14 pm #397385
Hi Mike!
Could you explain the ideas of “consideration payable to customers” under IFRS 15?
July 18, 2017 at 7:53 pm #397436I need the context of the quotation – it sounds to me that you have misread it
July 19, 2017 at 11:31 am #397536In step 3(determining the contract), it says an entity shall consider the effect of a consideration payable to customer
What does that mean?
July 19, 2017 at 7:32 pm #397644These are the 5 steps
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contracts
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
So which step 3 (“… step 3(determining the contract),”) are you referring to?
Where’s your quotation coming from?
I’ve just read right the way through the IASPLUS website on IFRS 15 and can see no mention of “an entity shall consider the effect of a consideration payable to customer”
Give me reference detail that I can check!
July 20, 2017 at 3:59 am #397690Consideration payable to a customer:
-If consideration is paid to a customer in exchange for a distinct good or
service, then it is essentially a purchase transaction and should be
accounted for in the same way as other purchases from suppliers.
Assuming that the consideration paid to a customer is not in exchange for a
distinct good or service, an entity should account for it as a reduction of the
transaction price.What does that mean?
July 20, 2017 at 7:49 am #397714This I wrote in my first response:
“I need the context of the quotation – it sounds to me that you have misread it”
This I wrote in my second response:
“Where’s your quotation coming from?” and “Give me reference detail that I can check!”
You see strangely reluctant or you simply do not read my responses
I keep asking you for a reference … but none is forthcoming 🙁
OK, I’ll try to explain the meaning of your latest post and hope that that seals the thread
When a sale is made, it’s most often a simple transaction – you pay money and the shop-keeper hands over a packet of cornflakes
But it’s not always so straight-forward and sometimes the vendor needs to give an incentive to the customer. I notice recently adverts on the television where car manufacturers are offering to give any customer $1,000 cash back when the customer buys a new car
That’s an example of your question “Assuming that the consideration paid to a customer is not in exchange for a distinct good or service, an entity should account for it as a reduction of the transaction price”
But if the customer says “I’ll buy a new car from you if you will buy one of the 3D copiers that I am trying to sell” then here we have an example of your question “If consideration is paid to a customer in exchange for a distinct good or service, then it is essentially a purchase transaction and should be accounted for in the same way as other purchases from suppliers”
OK?
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