Accounting technology / Glossary / IFRS 15

What is IFRS 15?

Definition

IFRS 15, Revenue from Contracts with Customers, is the IFRS standard on recognising revenue. Its core principle is that a company recognises revenue to show the transfer of promised goods or services to customers, at the amount it expects to be entitled to. It has applied to annual periods beginning on or after 1 January 2018.

Also calledRevenue from Contracts with Customers

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Effective: Periods from 1 January 2018
Replaced: IAS 18 and IAS 11
US equivalent: ASC 606

How IFRS 15 works

IFRS 15 was issued in May 2014, developed jointly with the FASB's ASC 606, and replaced IAS 18 on revenue, IAS 11 on construction contracts and several interpretations. It applies one five-step model to every type of customer contract, except leases, insurance and financial instruments, which have their own standards. Revenue is recognised over time if the customer receives the benefit as the work is done, the work creates an asset the customer controls, or the work has no alternative use and the company has a right to payment for work to date; otherwise it is recognised at a point in time, when control passes. The standard also covers contract costs, contract assets and liabilities, and extensive disclosures. In the UK and Ireland, FRS 102 adopted a five-step model based on IFRS 15 for periods from 1 January 2026.

Common questions

What did IFRS 15 replace?+

IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations, such as IFRIC 13 on customer loyalty programmes. It replaced separate rules for goods, services and construction with one model.

When is revenue recognised over time under IFRS 15?+

When the customer receives the benefit as the work is performed, the work creates or enhances an asset the customer controls, or the asset has no alternative use and the company has an enforceable right to payment for work done.

Does IFRS 15 apply to leases?+

No. Lease income falls under IFRS 16, and insurance contracts and financial instruments have their own standards. IFRS 15 applies to the other contracts with customers.