Revenue for Telecoms

Revenue for Telecoms – Issues In-Depth | 93
4.5 Noncash consideration |
Comparison with current US GAAP
Advance payments
835-30-15-3b
Amounts that do not require repayment in the future, but that will instead be
applied to the purchase price of the property, goods or services involved, are
currently excluded from the requirement to impute interest. This is because the
liability – i.e. deferred revenue – is not a financial liability.
The requirements under the new standard are a change from current practice and
may particularly impact contracts in which payment is received significantly earlier
than the transfer of control of goods or services.
When the financing component is significant to a contract, an entity increases the
contract liability and recognizes a corresponding interest expense for customer
payments received before the delivery of the good or service. When it satisfies
its performance obligation, the entity recognizes more revenue than the cash
received from the customer, because the contract liability has been increased by
the interest expense that has accreted.
4.5 Noncash consideration
Requirements of the new standard
606-10-32-21 – 32-22
[IFRS 15.66–67]
606-10-32-23
[IFRS 15.68]
Noncash consideration received from a customer is measured at fair value. If an entity
cannot make a reasonable estimate of the fair value, then it refers to the estimated
selling price of the promised goods or services.
Estimates of the fair value of noncash consideration may vary. Although this may be
due to the occurrence or non-occurrence of a future event, it can also vary due to the
form of the consideration – e.g. variations due to changes in the price per share if the
noncash consideration is an equity instrument.
When the fair value of noncash consideration varies for reasons other than the form of
the consideration, those changes are reflected in the transaction price and are subject
to the guidance on constraining variable consideration.
US GAAP only
606-10-32-21
Noncash consideration is measured at contract inception.
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