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“In other cases, it could be difficult to determine whether a significant financing component exists. This is likely to be the case where there are long-term arrangements with multiple performance obligations such that goods or services are delivered and cash payments received throughout the arrangement. For example, if an advance payment is required for business purposes to obtain a longer-term contract, then the entity may conclude that a significant financing obligation does not exist.”
Sir i just didn’t understand why in case of the above example where an advance is paid to obtain a longer-term contract is there no financing component?
Please refer to my other reply. I have no idea who is paying who in the paragraph quoted.
https://www.iasplus.com/en/standards/ifrs/ifrs15
If you are interested in the theory.
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