The European Commission has approved the use of IFRS 15 Revenue from Contracts with Customers across EU member states, when it comes into force globally in 2018, although there is still a minor stage endorsement process to complete before year end
This EU-adopted IFRS 15 standard reflects the decision taken last year to delay the adoption date from 1 January 2017 to 1 January 2018.
There is still a minor endorsement process outstanding to reflect clarifications to the accounting standard announced earlier this year by the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB).
The amendments clarify how to:
- identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract;
- determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and
- determine whether the revenue from granting a licence should be recognised at a point in time or over time.
In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new standard.
This final tranche of amends will be endorsed by EFRAG by year end 2016, and will be in force from the 2018 effective date.
This is a converged standard developed by the US and international standard-setters creating a single standard for those reporting revenue recognition under IFRS and US GAAP.
The effective date of IFRS 15 is now reflected in the overview of ongoing IFRS projects pending review available at EFRAG Endorsement Status Report.
The decision was taken on 22 September but EFRAG has only just published the notification in the Official Journal of the European Union as Commission Regulation 2016/1905 as of 22 September 2016