Guide to annual financial statements – IFRS 15 supplement

63 Pages·2015·1.46 MB·English

IFRS
Guide to
annual fnancial
statements –
IFRS 15
supplement

November 2015 OCI
STATEMENT
SUBSIDIARY
kpmg.com/ifrs DISPOSAL
IFRS EQUITY
ASSETS OPERATING SEGMENTS
FAIR VALUE NON-CONTROLLING INTERESTS
PRESENTATION
PROVISIONS
ESTIMATES DISCONTINUED OPERATIONS
LEASES
JUDGEMENT
OFFSETTING
ACCOUNTING POLICIES
SHARE-BASED PAYMENT PERFORMANCE TRANSACTIONS
CARRYING AMOUNT SHARE-BASED PAYMENT
UPDATE FINANCIAL INSTRUMENTS ACCOUNTING POLICIES
L O A N S B O R R O W I N G S FINANCIAL POSITION CASH FLOWS
IMPAIRMENT
COST CONSOLIDATION FAIR PRESENTATION
PENSION PROFIT OR LOSS IFRS
ASSUMPTIONS
REVENUE ANNUAL
DISCONTINUED OPERATIONS DERIVATIVES
PRESENTATION GROUP
ASSOCIATE IFRS
IFRS15NOTES
FAIR VALUE
BUSINESS COMBINATIONS JOINT ARRANGEMENTS
CASH EQUIVALENTS FAIR VALUE MEASUREMENT ACCOUNTING POLICIES
CONTINGENCY RELATED PARTY
CURRENT
TRANSACTIONS INTANGIBLE ASSETS
GOING CONCERN PERFORMANCE OFFSETTING
EPS PROFIT OR LOSS MATERIALITY
INVENTORIES ACQUISITIONTAX
CAPITAL COMPARATIVE VALUATION UPDATE
ASSETS MATERIALITY
CGU PENSION
NCI FAIR VALUE
PERFORMANCE
BUSINESS COMBINATIONS
OPERATING SEGMENTS
GOODWILL ESTIMATESOFFSETTINGOCI
CASH FLOWS PROFIT OR LOSS
LIABILITIES CONSOLIDATION
GOING CONCERN
UNCONSOLIDATED STRUCTURED ENTITIESFINANCIAL POSITIONPRESENTATION
DISCLOSURES
SIGNIFICANT PROPERTY ACQUISITION ASSUMPTIONS COMPARATIVE EQUITY
FINANCIAL POSITION SHARE-BASED PAYMENT EPS JOINT ARRANGEMENTS DISCLOSURES HELD-FOR-SALE PENSION
Contents
About this supplement 1
About IFRS 15 2
Statement of fnancial position 8
Statement of proft or loss and other
comprehensive income 10
Statement of changes in equity 12
Statement of cash fows 14
Revenue 16
Signifcant accounting policy 16
Nature of goods and services 16
Disaggregation of revenue 20
Contract balances 22
Transaction price allocated to the remaining
performance obligations 24
Operating segments 26
Changes in accounting policies 32
Appendices
I Retrospective application with practical expedients 38
II R etrospective application with the cumulative effect
of initially applying IFRS 15 44
Keeping you informed 58
Acknowledgements 60
About this supplement
This supplement has been produced by the KPMG International Standards Group (part of KPMG IFRG Limited) to complement
our Guide to annual fnancial statements – Illustrative disclosures (the September 2015 guide).
The September 2015 guide helps you to prepare fnancial statements in accordance with IFRS, illustrating one possible format
for fnancial statements based on a fctitious multinational listed corporation; the corporation is not a frst-time adopter of IFRS.
Revenue rf om contracts iw th customers
This supplement focuses on the disclosure requirements in IFRS 15 Revenue from Contracts with Customers, which are due
to become effective for annual periods beginning on or after 1 January 2018. It provides IFRS 15 disclosure examples and
explanations as a supplement to the September 2015 guide; as such, this supplement is not intended to reconcile to that guide.
This supplement does not illustrate all of the disclosures specifed in IFRS 15, which will depend on an entity’s underlying facts
and circumstances; for a full list of the potential disclosures, see our Guide to annual fnancial statements – Disclosure checklist
(September 2015).
Illustrative eax mples
The example disclosures in this supplement relate to a multinational listed corporation that is early adopting IFRS 15. The
corporation provides telecommunication services and builds satellite communication systems. The entity is required to present
only one year of comparative information, although some entities may be required to present comparative information for
more than one year. In addition, the disclosures are intended to explain the relevant requirements and therefore may be more
detailed than is necessary in some places. Individual entities should tailor the disclosures and their order to refect their specifc
circumstances, including the materiality of the items concerned.
In addition, IFRS and its interpretations change over time. As this publication is going to print, the IASB is considering
amendments to IFRS 15 to clarify certain aspects of the standard. Accordingly, this supplement should not be used as a
substitute for referring to the standards and interpretations themselves.
IFRS 15 offers a range of transition options and this publication illustrates only one of them. In this publication, the multinational
corporation has applied IFRS 15 retrospectively , using the practical expedient allowing non-disclosure of the amount of the
transaction price allocated to the remaining performance obligations, and an explanation of when it expects to recognise that
amount as revenue for all reporting periods presented before the date of initial application – i.e. 1 January 2015. Appendices I
and II illustrate disclosures when applying other transition options.
For further details of the transition options, see our publication Transition to the new revenue standard – What is the best option
for your business?
tS ructure o f this supplement
This supplement includes the following illustrative disclosures:
●● primary fnancial statements;
●● revenue note, including signifcant accounting policies for revenue recognition;
●● contract costs note;
●● operating segments note; and
●● changes in accounting policies note.
Appendices I and II illustrate disclosures that are made when applying alternative transition options.
Reef rences
References to the standards (primarily IFRS 15) are included in this supplement to identify the source of the related
disclosure requirements.
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2 | Guide to annual fnancial statements – IFRS 15 supplement
About IFRS 15
IFRS 15 replaces existing guidance and introduces a new model for revenue recognition that is based
on the transfer of control. This may affect the timing and amount of revenue that entities will recognise
under IFRS 15 compared to current practice. For some entities, there may be little change. However,
arriving at this conclusion will require an understanding of the new model and an analysis of how
it is applied to particular transactions. In addition, all entities will be subject to the new disclosure
requirements.
IFRS 15 is effective for annual periods beginning on or after 1 January 2018. Early adoption is permitted.
For further details of IFRS 15 and its impacts, see our publication Issues In-Depth – Revenue from
Contracts with Customers.
Disclosure requirements
IFRS 15 contains both quantitative and qualitative disclosure requirements for annual and interim
periods. The disclosure requirements discussed in this publication relate to annual periods, unless
indicated otherwise. Under the new standard, an entity discloses more information about its contracts
with customers than is currently required under IAS 18 Revenue and IAS 11 Construction Contracts,
including more disaggregated information about revenue and more information about its performance
obligations remaining at the reporting date.
IFRS 15.110 The objective of the disclosure requirements is to provide suffcient information to enable users of
fnancial statements to understand the nature, amount, timing, and uncertainty of revenue and cash fows
arising from contracts with customers.
IFRS 15.113, 129 An entity is required to disclose, separately from other sources of revenue, revenue recognised from
contracts with customers, and any impairment losses recognised in accordance with IFRS 9 Financial
Instruments (or IAS 39 Financial Instruments: Recognition and Measurement if applicable) on receivables
or contract assets arising from contracts with customers. If an entity elects either the practical expedient
not to adjust the transaction price for a signifcant fnancing component or the practical expedient not to
capitalise costs incurred to obtain a contract, then it discloses that fact.
IFRS 15.114–128 IFRS 15 includes disclosure requirements on the disaggregation of revenue, contract balances,
performance obligations, assets recognised to obtain or fulfl a contract, as well as signifcant judgements
in the application of the standard.
Entities will need to assess whether their current systems and processes are capable of capturing,
tracking, aggregating and reporting information to meet the disclosure requirements of the new
standard. For many entities, this may require signifcant changes to existing data-gathering processes,
IT systems and internal controls.
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Guide to annualn� ancial statements –� IFR1�S 5 supplement | 3
Disaggregation of revenue
IFRS 15.114–115, B87–B89 IFR S 15 reuq ires the disclosure o f revenue f rom contracts iw th customers disaggregated into
categories that depict ho w the nature, amount, timing, and uncertainty o f revenue and cash o� sw are
aef f cted by economic af ctors. hT e standard includes eax mples o f such categories.
An entity also discloses the relationship betew en the disaggregated revenue and the entitys’
segmentd� isclosures.
In determining these categories, an entity considers ho w revenue is disaggregated, in:
●● disclosures presented outside the n� ancial statements – e.g. earnings releases, annual reports, or
investor presentations;
●● inof rmation revieew d by the chie f operating decision maek r of r evaluating the n� ancial perof rmance o f
operating segments ; and
●● other inof rmation similar to the above that is used by the entity or users o f the entitys’ n� ancial
statements to evaluate perof rmance or maek resource allocation decisions.
Geography
Type of good or
Contract duration
service
Timing of transfer Example Market or type of
of good or service categories customer
Sales channels Type of contract

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4 | Guide to annual fnancial statements – IFRS 15 supplement
Detailed disclosures
This section provides an overview of the disclosure requirements under the new revenue standard and
highlights similarities with and differences from the existing disclosure requirements.1
IFRS 15 Disclosure requirements Revenue recognised
reference What’s
Over time At a point new?
in time
IFRS 15.116–118 Contract balances
●● The opening and closing balances related to
contracts with customers (if not otherwise  
separately presented or disclosed) for:
– contract assets,
– contract liabilities, and
– receivables from contracts with customers.
●● The amount of revenue recognised in the current
period that was included in the opening contract  
liability balance.
●● The amount of revenue recognised in the current
period from performance obligations satisfed  
(or partially satisfed) in previous periods – e.g.
changes in transaction price.
●● An explanation of how the timing of satisfaction
of entity’s performance obligations relates to  
the typical payment terms and how these two
factors will affect the contract asset and contract
liability balances.
●● An explanation of the signifcant changes in the
balances of contract assets and contract liabilities,  
including both qualitative and quantitative
information – examples could include:
– changes arising from business combinations;
– cumulative catch-up adjustments to revenue
(and to the corresponding contract balance)
arising from a change in the measure of
progress, a change in the estimate of the
transaction price, or a contract modifcation;
– impairment of a contract asset; or
– changes in the timeframe for a right to
consideration becoming unconditional
(reclassifed to a receivable) or for a
performance obligation to be satisfed
(the recognition of revenue arising from a
contract liability).
IFRS 15.119–122 Performance obligations
●● When the entity typically satisfes its performance
obligations – e.g. on shipment, on delivery, as  
services are rendered, or on completion of service;
New Existing Expanded requirements
disclosure requirement Similar disclosure requirements exist under current
required standards1; however, they are more detailed or specifc under
under IFRS 15 IFRS 15.
1. For example, IAS 1 Presentation of Financial Statements, IAS 11, IAS 18, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and
IFRS 8 Operating Segments.
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Guide to annualn� ancial statements –� IFR1�S 5 supplement | 5
IFRS 15 Disclosure requirements Revenue recognised
reference What’s
Over time At a point new?
in time
●● iS gnic� ant payment terms – e.g. hw ether the
contract has a signic� ant n� ancing component,  
the consideration is variable, and the variable
consideration isc� onstrained.
●● hT e nature o f the goods or services that the
entity has promised to transef r, highlighting any  
perof rmance obligations to arrange of r another party
to transef r goods or services i( f the entity is acting
as an agent.)
●● bO ligations of r returns, reuf nds, and other
similaro� bligations.  
●● yT pes o f aw rranties and related obligations.
 
●● hT e aggregate amount o f the transaction price
alocated to perof rmance obligations that  
are unsatise� d o( r partially unsatise� d ) at the
reporting date. A uq antitative u( sing time bands )
or a uq alitative epx lanation o f hw en it epx ects
that amount to be recognised as revenue is
alsor� euq ired.
IFRS 15.121, 129 As a practical epx edient, an entity is not reuq ired to
disclose the transaction price allocated to unsatise� d
o( r partially unsatise� d ) perof rmance obligations, and
hw en the entity epx ects to recognise that revenue
using uq antitative or uq alitative disclosures, i:f
●● the contract has an original epx ected duration o f
one year or less ; or
●● the entity applies the practical epx edient to
recognise revenue at the amount to hw ich it has a
right to invoice, hw ich corresponds directly to the
value to the customer o f the entitys’ perof rmance
completed to date – e.g. a service contract in
hw ich the entity bills a ex� d hourlya� mount.
I f an entity elects to use the practical epx edient, it
discloses thataf � ct.
IFRS 15.122 hT e entity also discloses hw ether it is applying the
practical epx edient and hw ether any consideration  
rf om contracts iw th customers is not included in
the transaction price – e.g. hw ether the amount
is constrained and thereof re not included in
thed� isclosure.
New Existing Expanded requirements
disclosure requirement Similar disclosure requirements exist under current standards;
required however, they are more detailed or specifc under IFRS 15.
under IFRS 15
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6 | Guide to annual fnancial statements – IFRS 15 supplement
IFRS 15 Disclosure requirements Revenue recognised
reference What’s
Over time At a point new?
in time
IFRS 15.123–126 Signifcant judgements when applying IFRS 15
●● An entity discloses the judgements and changes
in judgements made in applying the new standard  
that affect the determination of the amount
and timing of revenue recognition– specifcally,
those judgements used to determine the timing
of the satisfaction of performance obligations,
the transaction price, and amounts allocated to
performance obligations.
●● For performance obligations that are satisfed
over time, an entity describes the method used to 
recognise revenue – for example:
– a description of the output or input method
and how those methods are applied; and
– why such methods are a faithful depiction of
the transfer of goods or services.
●● For performance obligations that are satisfed
at a point in time, the new standard requires 
a disclosure about the signifcant judgements
made to evaluate when the customer obtains
control of the promised goods or services.
An entity discloses information about the methods,
inputs, and assumptions used to:  
●● determine the transaction price, which includes:
– estimating variable consideration,
– assessing whether the variable consideration is
constrained,
– adjusting the consideration for a signifcant
fnancing component, and
– measuring non-cash consideration;
●● allocate the transaction price, including estimating
the stand-alone selling prices of promised goods
or services and allocating discounts and variable
consideration; and
●● measure obligations for returns and refunds, and
other similar obligations.
New Existing Expanded requirements
disclosure requirement Similar disclosure requirements exist under current standards;
required however, they are more detailed or specifc under IFRS 15.
under IFRS 15
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Guide to annualn� ancial statements –� IFR1�S 5 supplement | 7
IFRS 15 Disclosure requirements Revenue recognised
reference What’s
Over time At a point new?
in time
Assets recognised from costs to obtain or fulfl a contract with a customer
IFRS 15.127–128 An entity discloses the of lloiw ng items that are
recognised rf om the costs incured to obtain or uf l� a  
contract iw th a customer :
●● the amount o f amortisation ; and
●● any impairment losses recognised in the reporting
period.
hT ese items are separated by their main category
– e.g. acuq isition costs, prec- ontract costs, setu- p
costs, and other uf ll� ment costs.
An entity describes the uj dgements made in
determining the amount o f the costs incured to  
obtain or uf ll� a contract iw th a customer and the
method used to determine the amortisation of r each
reportingp� eriod.
New Existing Expanded requirements
disclosure requirement Similar disclosure requirements exist under current standards;
required however, they are more detailed or specifc under IFRS 15.
under IFRS 15
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8 | Guide to annual fnancial statements – IFRS 15 supplement
Statement of fnancial position
Explanatory notes
IFRS 15 C5, a. IFRS 15 offers a range of transition options and this publication illustrates only one of them. In
Insights 4.2A.430 this publication, the Group applies IFRS 15 retrospectively, using the practical expedient in
paragraph C5(c) of IFRS 15 in relation to remaining performance obligations. Appendices I and II
provide example disclosures when applying other options.
IAS 1.10(f), 40A b. The Group has presented a third statement of fnancial position as at the beginning of the preceding
period, because retrospective changes in accounting policy have a material effect on the information in
the statement (see Note 4).
IAS 8.26, c. The Group has labelled the restated comparative information with the heading ‘restated’.
Insights 2.8.50.110
In our view, this is necessary to highlight to users the fact that the comparative information is not the
same as the information previously presented in the prior year’s fnancial statements.
IFRS 15.B21, d. IFRS 15 and other standards do not specify where assets for rights to recover products from
BC367 customers with regard to sale with a right of return should be presented. The Group has included the
assets in ‘Inventories’ and discloses them separately in the related note (not illustrated).
IFRS 15.105, 108, e. Any unconditional rights to consideration are presented separately as a receivable. A right to
BC322–326 consideration is unconditional if only the passage of time is required before payment of that
consideration is due.
IFRS 15.105, 109, f. Although this publication uses the term ‘Contract assets’, an entity may also use other terms.
A, BC320
IFRS 15.55 g. The Group has presented its refund liabilities as ‘Trade and other payables’ under IFRS 15.
IFRS 15.105, h. Although this publication uses the term ‘Contract liabilities’, an entity may also use other terms.
109, BC320–321
IFRS 15.B30 i. If a customer does not have the option to purchase a warranty separately, an entity accounts for the
warranty in accordance with IAS 37 unless the promised warranty, or a part of the promised warranty,
provides the customer with a service in addition to the assurance that the product complies with
agreed-upon specifcations.
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