/Filter/FlateDecode/ID[<703E919981036549A52F172B6624A364><52207691B48FE947A59CB207D83E71B3>]/Index[902 41]/Info 901 0 R/Length 115/Prev 272792/Root 903 0 R/Size 943/Type/XRef/W[1 2 1]>>stream IFRS 15 requires an entity to assess the goods or services promised in a contract to identify the performance obligations in that contract. Latest insight IFRS 15 Revenue: Practical experiences from the market. So this feels like the right time to . Inventory $103 Some fulfillment costs meet the definition of an asset, such as inventory. The article stopped short, however, of making the statement that "shipping and handling costs that are incurred after a customer takes control "must be treated as a separate performance obligation" or "should be assessed to determine..". Under ASC 606, entities have a choice of considering such S&H costs as either a separate performance obligation or as fulfillment cost (as they are treated if the shipping occurs BEFORE the customer takes control of the goods (i.e. Do you just record the inventory at $103? In addition, we take no responsibility for updating old posts, but may do so from time to time. Apr 24, 2019 at 05:48 PM. What exactly are “repurchase agreements” and what is their impact on accounting for revenue under IFRS 15? Entities must make an accounting policy election to treat shipping and handling activities as either a fulfillment cost or as a separate promised service (i.e. Do you look at the cost, or lack thereof, related to shipping and handling when you purchase goods online? What about past practice of replacing stolen and broken goods? Thank you - however for where the goods were sold FOB what is the treatment under IFRS 15 ? The IASB is the independent standard-setting body of the IFRS Foundation, a not-for-profit corporation promoting the adoption of IFRSs. Does the accounting treatment differ from that under IFRS 15 (IFRS’s version of the new revenue recognition standard)? Hi Mike, excellent note. FOB Destination), then essentially U.S. GAAP and IFRS require the same accounting treatment. As previously mentioned, many companies currently consider shipping and handling to be fulfillment activities and, thus, requiring them to account for such activities as a separate promised service, would be a significant change in practice. Thanks, Mike Walworth, CPA: Do shipping terms (FOB shipping point vs destination) principally determine the timing of control transfer or other/additional factors must also be considered, shipping terms notwithstanding? Ashish Agarwal: which shipping and handling is an issue for IFRS constituents. 902 0 obj <> endobj Under existing U.S. GAAP, many companies do not account for shipping and handling activities separately, but rather treat them as fulfillment costs. This paper accompanies the following IASB agenda papers: (a) Agenda paper 7A Implications of amending IFRS 15 before the mandatory effective date. The accounting policy election provided by ASU 2016-10 is to be applied consistently to similar types of transactions. However, four ASUs later, the standards are moving further apart. Jun 27, 2018 at 10:46 PM. , or lack thereof, related to shipping and handling activities would always considered! 13 IASB members present agreed with these decisions critical to revenue recognition under IFRS 15 revenue contracts... Entering your email below is a cost of sales ) delivery, including S & H is as. Credit, some sort of deferred revenue countries that use IFRS Standards, CPA: Nov 12 2018. 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