IFRS 15 Revenue from Contracts with Customers is a new accounting standard that has been introduced by the International Accounting Standards Board (IASB). The standard sets out the principles that entities must apply in order to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity`s contracts with customers.

KPMG is a global network of professional firms providing audit, tax, and advisory services. KPMG has been working with clients in various industries to help them understand and implement the new accounting standard.

The new standard is a significant change from the previous guidance and will impact nearly every industry. It requires companies to apply a five-step model to determine when revenue should be recognized and how much revenue should be recognized.

Step one requires identifying the contract(s) with a customer. This step involves determining whether a contract exists, identifying the parties to the contract, identifying the performance obligations in the contract, and determining the transaction price.

The second step requires identifying the performance obligations in the contract. Performance obligations are promises to transfer goods or services to a customer, and they can be explicit or implicit.

Step three requires determining the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

The fourth step requires allocating the transaction price to the performance obligations in the contract. This step involves determining the stand-alone selling price of each distinct good or service promised in the contract and allocating the transaction price in proportion to the stand-alone selling price of each promised good or service.

The final step requires recognizing revenue when (or as) the entity satisfies a performance obligation. This step involves determining when control of the promised goods or services is transferred to the customer and recognizing revenue in the amount allocated to the satisfied performance obligation.

Companies need to take a thorough look at their existing contracts to ensure they comply with the new standard. They also need to update their accounting policies, processes, and controls to ensure that they can properly apply the five-step model.

In conclusion, IFRS 15 Revenue from Contracts with Customers is a significant change from the previous guidance and will impact nearly every industry. It requires companies to apply a five-step model to determine when revenue should be recognized and how much revenue should be recognized. KPMG is a global network of professional firms providing audit, tax, and advisory services that can help companies understand and implement the new accounting standard. Companies need to take a thorough look at their existing contracts to ensure they comply with the new standard and update their accounting policies, processes, and controls.

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