HKFRS 15 Revenue from Contracts with Customers

Technical Resources

This webpage contains pronouncements, guides and articles that are relevant
to HKFRS 15 Revenue from Contracts with Customers.

Effective Date

Financial periods beginning on or after 1 January 2018.

Affected standards

HKAS 18 Revenue, HKAS 11 Construction Contracts, HK(IFRIC)-Int 13 Customer Loyalty Programmes, HK(IFRIC)-Int 15 Agreements for the Construction of Real Estate, HK(IFRIC)-Int 18 Transfers of Assets from Customers and HK(SIC)-Int 31 Revenue—Barter Transactions Involving Advertising Services.

Why do we need a new standard

Information about revenue is used to assess a company’s financial performance and position and to compare that company with other companies. However, previous revenue requirements:

• made it difficult for investors and analysts to understand and compare a company’s revenue as the disclosure requirements were found to be inadequate and boilerplate; and
• were inconsistent and lacked guidance that deal with important and/or complex transactions, particularly because basis for conclusions were not provided with previous Standards.

HKFRS 15 introduced a comprehensive and robust framework for the recognition, measurement and disclosure of revenue that applies to a wide range of transactions and industries. The Standard sets out a single coherent approach to recognizing and measuring revenue that provides useful information to investors about the nature, amount, timing and uncertainty of revenue and cash flows arising from a company’s contracts with customers.

Recent development  
To understand whether the accounting standard is working as intended, the IASB started undertaking a Post-implementation Review of IFRS 15 in September 2022 and issued a Request for Information in June 2023. The Hong Kong Institute of Certified Public Accountants (Institute) conducted various forms of outreach activities to solicit feedback from local stakeholders. In October 2023, the Institute submitted its comment letter to the IASB.

On 30 September 2024, the IASB published the Project Summary and Feedback Statement, in which it concluded that the requirements in IFRS 15 are working as intended.
The IASB identified several matters for further consideration in its next agenda consultation, including:

• how to report on consideration payable to a customer;
• how entities determine whether they act as a principal or an agent; and
• how IFRS 15 works alongside other IFRS Accounting Standards—specifically with IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRIC 12 Service Concession Arrangements.

The IASB will also gather further evidence on matters related to how an entity assesses whether the transfer of an asset is a sale in a sale and leaseback transaction in the Post-implementation Review of IFRS 16 Leases.

Frequently used resources