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Significant Financing Component Consideration under IFRS 15

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Significant Financing Component Consideration under IFRS 15

  • This topic has 1 reply, 1 voice, and was last updated 1 day ago by Stephen Widberg.
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  • August 9, 2025 at 2:13 pm #718688
    khanxkhan
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    Suppose I am providing maintenance services for a period of 3 years for $1,200. In a YouTube lecture by a reputed tutor, I saw the transaction being recorded as:
    Dr Cash $1,200
    Cr Deferred Income $1,200
    and at the end of each year:
    Dr Deferred Income $400
    Cr Sales $400.
    However, shouldn’t we consider whether there is a significant financing component, calculate the present value of the consideration, and then unwind the discount each year?

    August 11, 2025 at 8:15 am #718708
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3420
    • ☆☆☆☆☆

    Something that I would only think about if payment was in arrears.

    I see your point, but, in the exam, above all, keep it simple. 🙂 That’s what accountants should be doing. My vote is with your mystery tutor.

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