Other issues

Costs of obtaining a contract:

• The costs of obtaining a contract are capitalised if the entity expects to recover them (e.g. agent’s commissions, salesmen’s commissions for obtaining contracts).
• An entity may immediately expense such costs when the asset amortisation period is one year or less.
• Such costs are recognised separately in the statement of financial position.
• An asset is amortised for the period of transferring goods or performing services, and is subject to impairment test — if the costs refer to more than one contract (e.g. planned extension of the contract), and the amortisation should take into account current and projected contracts.

Onerous contracts:

• Under the Standard, the requirements in IAS 37 for onerous contracts apply to all contracts in the scope of IFRS 15.
• The new Standard states that entities that are required to recognise a liability for expected losses under IAS 37will continue to be required to do so.

Disclosures:

• Significant expansion of disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
• An entity must disclose qualitative and quantitative information about the following:
  - its contracts with Customers (e.g. the disaggregation of revenue, information about contract asset and liability balances and information about an entity’s performance obligations);
  - significant judgments and estimates (methods, inputs and assumptions used for determining the transaction price, constraints, the allocation of the performance obligation and the measurement of the refund liability, the method for determining when a performance obligation is satisfied);
  - capitalised costs incurred to obtain or fulfill a contract (qualitative information on the judgments made in determining the amount and method of amortisation; value information on the closing balance and the amount of amortisation recognised in the period).

Effective date and transitional provisions:

• Effective date: 1 January 2018. Earlier application is permitted.
• The Standard provides for two alternative adoption methods:
  - Full retrospective adoption, i.e. applying the standard to all periods presented in the financial statements as if the standard has been in force since the effective date of the contract; the cumulative effect of changes referring to the periods prior to the presented data is recognised in the opening balance of retained earnings of comparative information.
  - Modified retrospective adoption — the Standard applies only to the data from the current period (2018); comparative information is not restated; the cumulative effect of changes is recognised in the opening balance of retained earnings of the current period.

The effect of the Standard adoption method on reporting data in the financial statements for 2018.

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