Introduction

Information:

On 22 September 2016, the European Union approved the International Financial Accounting Standard 15 – Revenue from Contracts with Customers (IFRS 15), which contains revenue recognition requirements. The standard applies for annual periods beginning on or after 1 January 2018. IFRS 15 will replace all existing regulations and interpretations concerning revenue recognition.

The core principle of the new standard is that an entity will recognise revenue in its financial statements so as to depict the transfer of goods or services to customers in an amount that reflects the consideration (i.e. payment) which the entity expects in exchange for those goods or services. Pursuant to the new regulations, revenue arises when the control over goods or services passes to the customer. The transfer of control is not the same as the transfer of risk and rewards, and not necessarily the same as the culmination of the process of revenue generation as it is understood today. Entities will also have to apply the new guidelines to determine whether the revenue should be recognised over time or once at a defined point in time. The amount of recognised revenue should take into account the risk of the counterparty’s default and the appropriate portion of the variable consideration which, as estimated by the Board of Directors, is the amount of the expected payment.

As a result of the implementation of IFRS 15, entities may experience significant changes concerning the amount of revenue and the time of its recognition and, in some cases, also of the costs of obtaining contracts. In particular, entities that have contracts with customers giving rise to various performance obligations will need to analyse such contracts in detail and determine the revenue recognition model for each performance separately as required by the Standard. This may mean the necessity of reconstructing transaction information collection and recording systems.

IFRS 15 may significantly affect financial statements of companies, including their profitability ratios.

We provide IFRS 15 and other services throughout Poland in regional offices in Warsaw, Łódź and Poznań, Opole, Wrocław, Katowice, Lublin, Gdańsk and Zielona Góra.