IFRS 15 and 16 – Revenue Recognition and Leases for All Industries

The purpose of IFRS 15 is to define the rules that an entity must adhere to in order to give readers of financial statements pertinent information about the sort, number, timing, and level of uncertainty around revenue and cash flows deriving from customer contracts.

IFRS aims to provide consistency in reporting across industries and guarantee that consumers may obtain relevant information when making decisions. The core principle of IFRS 15 states that a company should record revenue when promised goods or services are delivered to customers in a quantity that corresponds to the payment the company expects to receive in exchange for those goods or services. A five-step approach that will be covered in this course explains this basic concept.

Additionally, the course thoroughly discusses the IFRS 16 principle for measuring and recognizing leases. The concepts of right-of-use assets, lease liability, and service contracts are the main topics of the course.

IFRS 16 is a relatively new standard which has replaced the old standard IAS 17 – Leases. The introduction of IFRS 16 was primarily done to prevent “Off Balance Sheet Financing,” which IAS 17 was unable to prevent.