Contract modification and costs
You'll learn how to account for contract modifications under IFRS 15 and determine whether they create separate contracts or form part of the original arrangement.
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In this lesson
- 0:00 Contract modifications and accounting treatment
- 0:34 Modifications not treated as separate contracts
- 1:19 Modifications as part of original contract
- 1:54 Worked example: Contract modification with price increase
- 3:25 Contract costs: Obtaining and fulfilling contracts
- 4:28 Special revenue recognition scenarios
- 5:36 Consignment and upfront fee arrangements
About this lesson
This video covers the key criteria for identifying distinct modifications, how to recognise revenue when contracts change, and the treatment of contract costs including incremental costs of obtaining contracts and costs to fulfil them. You'll also explore specific revenue scenarios like sales with rights of return, consignment arrangements, and non-refundable upfront fees, with a worked example showing how to account for price and scope changes in practice. Essential for Financial Reporting and Strategic Business Reporting papers, this topic appears regularly in case studies and objective tests where contract analysis is critical to accurate revenue recognition.
Duration: 6m
Transcript
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