Revenue for Telecoms

12 | Revenue for Telecoms – Issues In-Depth
| 1 Scope
In addition to sales of property, plant and equipment and leases, some nonmonetary
transactions may also be scoped out of the new standard if they
constitute a non-monetary exchange between entities in the same line of
business to facilitate sales to their existing or potential customers. When these
arrangements include some monetary exchange, an entity would need to
consider whether any part of the arrangement is included in the scope of the
new standard. If so, these transactions would be reported as other revenue
or gain or loss, as appropriate under other applicable guidance, and would be
excluded from disclosures required by the new standard.
Payments received from government agencies
Sometimes a telecom entity may receive a grant, subsidy or other payment from
a government agency. In accounting for these payments, an entity would first
apply any explicit guidance in its accounting framework. In the absence of explicit
guidance (assuming the government agency is not making a payment on behalf
of a customer or otherwise does not meet the definition of a customer and is
thus outside the scope of the new standard), the telecom entity should consider
the most appropriate guidance to apply to its specific facts and circumstances.
This could include an assessment of whether the principles in the new standard
can be applied by analogy.
Comparison with current IFRS
Fewer network capacity exchanges may qualify as revenue transactions
[IAS 16.24, IAS 18.12, SIC-31]
Under current IFRS, certain non-monetary exchanges of network capacity
are reported as revenue-generating transactions, if the items exchanged are
dissimilar, fair value can be measured reliably and the transaction occurs in the
ordinary course of business.
The new standard includes a specific scope exclusion for non-monetary
exchanges. That scope exclusion requires a different analysis of non-monetary
transactions, specifically whether the exchange involves entities in the same line
of business and is completed to facilitate sales to customers. Transactions that
meet these criteria will be outside the scope of the new standard, even if they
involve dissimilar assets.
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