Revenue - part 1

In this lesson

1. 0:00 Introduction to IFRS 15 revenue recognition
2. 0:57 Defining revenue and income
3. 3:03 The five-step IFRS 15 model overview
4. 5:23 Step 1: Identifying the contract
5. 6:04 Step 2: Identifying performance obligations
6. 6:42 Step 3: Determining the contract price
7. 8:14 Step 4: Allocating price to obligations
8. 9:08 Step 5: Recognising revenue over time

About this lesson

This video breaks down how to identify contracts, pinpoint performance obligations, determine transaction prices, allocate prices fairly, and recognise revenue at the right time—whether for goods sold at a point in time or services delivered over a period. Understanding this framework is essential for exam success and real-world application, as it clarifies exactly when revenue should appear in your financial statements. The five-step approach forms the backbone of IFRS 15. You'll start by identifying the contract (the legal agreement between buyer and seller), then identify performance obligations (what you're actually delivering—goods, services, or both). Next, you determine the total contract price, including any variable consideration or financing elements. Step four requires you to allocate that price across each obligation using fair market values, not stated prices if items are given away. Finally, you recognise revenue when performance is complete: at a point in time for goods, and over a period for services. The distinction between revenue and other income is crucial. Revenue is direct income from your main business activity—selling goods or providing services. Anything else, like rental income from spare offices, is classified as incidental or sundry income. This clarity matters for exam marking and financial statement presentation. The video walks through each step in detail and prepares you to apply this model to case study scenarios and objective test questions across your qualification.

Duration: 10m