IFRS 15 – Omsætning fra kontrakter med kunder: Indvirkning på sammenligneligheden af årsregnskaberne samt praktiske udfordringer ved implementering

Nicholas Jacob Kaufmann

Student thesis: Diploma thesis


The new revenue recognition Standard IFRS 15 has jointly been developed by IASB and FASB (collectively “the Boards”) over the past decade through several individual projects and exposure drafts. The Standard and its preceding drafts have been subject to massive critique – both positive and negative – from virtually all stakeholders. In short, the Standard requires largely all components of revenue and related items arising from contracts with customers to be estimated at fair value. In addition thereto, the Standard requires the preparation of extensive disclosures on how estimates are derived and on which assumptions these estimates have been based, along with several disclosure requirements regarding the nature, timing and origin of revenues. These requirements may collectively necessitate an entity to rethink the way estimates are conceived. The Standard supersedes nearly all current legislation and guidance related to contracts with customers. Therefore, where many IFRS-preparers have previously sought guidance through standard interpretations, US GAAP or sector specific guidance, IFRS 15 requires an entity to apply the Standard to all sources of revenue from contracts with customers, except those explicitly excluded from the scope of the Standard. The current attitude towards IFRS 15 among Danish IFRS preparers is that the Standard will not have a material effect on the financial statements, and therefore it is commonly assumed that a detailed impact analysis of implications is not necessary to be performed. This assumption is further proclaimed as the effective date has been deferred by the Boards until 1 January 2018, as well as the fact that the Standard is yet to be adopted by the European Union. The purpose of this thesis is to serve as an eye-opener for those IFRS-preparers and other stakeholders, who invariably believe that the Standard will not have a material impact on their respective entities. Although this may or may not be the case in terms of financial statement impact, the Standard will affect the entities in several other areas, which will require the entity to rethink their internal accounting policies, procedures and control frameworks. Such implications may consist of, but are not limited to, determination of estimates and assumptions for recognised revenue, allocation and recognition of variable consideration, determination of transfer of control, tax planning, and revised investment strategies to name a few. The thesis’ purpose is achieved through an in-depth look into the core requirements of IFRS 15 illustrated by examples and comparisons with the current revenue recognition requirements of IAS 11/18. Furthermore, to emphasise the level of consideration and insight required to effectively institute the effects of the Standard, analyses of Stakeholder critique of the Standard have been prepared and compared. The result of the comparisons between current and future Standards and between the different stakeholders views of implementation concerns accentuate the vast difference in perceived consequences of the Standard. The analyses unanimously show that there are numerous elements of the Standard, which requires an entity to deliberate application approach with management and to prepare estimates and assumptions in a way that may be substantially different from current practice. The Standard is expected to be adopted by the EU sometime within first half of 2016. Although effective date may seem to be sometime in a very distant future, entities will likely benefit from analysing the effects of the Standard already at this point, as the consequences may be more comprehensive than assumed.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2016
Number of pages83