?? Exploring the Philosophical Background of IFRS 15

Hi everyone,

I’d like to share some thoughts on the philosophical background of IFRS 15. This standard doesn’t just focus on recognising revenue based on what the company can control, but also on external factors like collection and the customer’s ability to pay. I believe this approach has a stoic foundation, inviting us to value both internal reality and external conditions in our accounting decisions.

?? Key Aspects of IFRS 15

1. Identification of contracts with customers.

2. Identification of performance obligations in the contract.

3. Determination of the transaction price.

4. Allocation of the transaction price to performance obligations.

5. Recognition of revenue when a performance obligation is satisfied.

?? Stoic Approach

From the conceptual framework, it has always been emphasised that revenue is recognised when there is certainty of its recovery. IFRS 15 adds that external factors that cannot be controlled must also be considered. This is where IFRS 9 with its Expected Credit Loss (ECL) approach comes into play, providing a comprehensive and realistic view of the transaction.

IFRS 15 promotes transparency and honesty by recognising revenue based on a fair assessment of internal and external factors. This approach enhances confidence in financial statements by accurately reflecting economic reality.

?? Got questions about IFRS 15? Drop them in the comments!