What is required for a contract to exist under IFRS 15?
Understand the Problem
The question asks about the necessary conditions for a contract to exist according to IFRS 15 (Revenue from Contracts with Customers). We need to identify which of the provided options accurately reflects the requirements outlined in IFRS 15 for contract recognition.
Answer
Under IFRS 15, a contract exists when the parties have approved it, rights are identifiable, payment terms are established, there is commercial substance, and collection of payments is probable.
Under IFRS 15, a contract exists when the parties to the contract have approved it, each party's rights can be identified, payment terms are established, the contract has commercial substance, and collection of consideration is probable.
Answer for screen readers
Under IFRS 15, a contract exists when the parties to the contract have approved it, each party's rights can be identified, payment terms are established, the contract has commercial substance, and collection of consideration is probable.
More Information
IFRS 15 provides a comprehensive framework for revenue recognition, replacing older standards like IAS 18 and IAS 11. It aims to improve the consistency and comparability of revenue reporting across different industries and jurisdictions.
Tips
A common mistake is to only consider the written agreement. IFRS 15 requires considering all relevant facts and circumstances, including customary business practices.
Sources
- IFRS 15 — Revenue from Contracts with Customers - IAS Plus - iasplus.com
- [PDF] ifrs-15-revenue-from-contracts-with-customers.pdf - ifrs.org
- Identifying a Contract with a Customer (IFRS 15) - IFRScommunity.com - ifrscommunity.com
AI-generated content may contain errors. Please verify critical information
