Core concepts
- 015-step model: Identify contract → Identify POs → Determine transaction price → Allocate → Recognise.
- 02Performance obligation: distinct goods/services in contract.
- 03Transaction price: variable consideration, financing component, non-cash, payable to customer.
- 04Allocate based on stand-alone selling prices (SSP).
- 05Over-time recognition criteria (e.g., no alternative use + right to payment).
Flowchart
5-Step Revenue Model 1. Contract identified? | 2. Performance Obligations distinct? | 3. Transaction Price (var + non-cash + financing) | 4. Allocate based on SSP | 5. Recognise: point in time / over time
Exam-critical pointers
- ⭐Principal vs Agent: control of good before transfer; gross vs net presentation.
- ⭐Contract modifications: separate contract, termination & new, prospective adjustment.
- ⭐Warranties: assurance type (provision) vs service type (separate PO).
- ⭐Disclosures: contract balances, disaggregation, performance obligations, significant judgments.
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