Transfer of control of goods or services
IFRS 15 recognises revenue when or as each performance obligation is satisfied by transferring control. Assess whether control transfers over time using the specified criteria; otherwise determine the point in time using indicators such as a present right to payment, legal title, physical possession, significant risks and rewards and customer acceptance. No indicator should be treated as an automatic rule without evaluating the contract.
Worked example
A customer accepts a standard machine, obtains legal title and possession and has an unconditional obligation to pay. If the facts establish control has transferred at acceptance, the seller recognises the allocated revenue then.
Common mistake
Recognising revenue merely when an invoice is issued or physical possession changes without considering who can direct use and obtain the benefits.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |