In which of the following arrangements is there a customer as defined in IFRS 15 Revenue from Contracts with Customers?
In response to a series a negative posts and comments on social media, Lets Eat Well Inc., a café selling ethically sourced plant-based meals and beverages to the public, sells all its non-sustainable, non-eco-friendly furniture and equipment to the local Homeless Shelter – at a price sufficient to recover its costs only
Better Beats Ltd. is concerned about the increasing rate of heart disease partners with the globally successful company EatWell Inc. to develop a comprehensive nutrition programme to sell on-line. The vision of the programme is to reduce the risk of heart disease. The two companies agree to share in the profits from the sales.
Cameron Dealy, an up and coming country western singer, buys a pair of black leather boots on deferred payment from Better Boots Ltd., an internationally renowned footwear retailer. Cameron uses the ‘click and collect’ facility at the on-line check out to arrange to collect the boots at the local Better Boots Ltd. store.
ChargeIT Ltd. designs and manufactures electric cars. Ester, ChargeIT’s chief engineer, is a cycling enthusiast and in her own recreational time motorizes her bicycle. A post of the motorization, on her personal social media page, goes viral. A start-up company enters into a contract with Ester to buy her motorization plans
In the given scenarios, the arrangement that involves a customer as defined in IFRS 15 Revenue from Contracts with Customers is:
Cameron Dealy, an up and coming country western singer, buys a pair of black leather boots on deferred payment from Better Boots Ltd. This is a standard customer purchase where Cameron is obtaining goods (the boots) in exchange for payment. Therefore, Cameron is a customer of Better Boots Ltd. in this scenario.
In the other scenarios:
- In the case of Lets Eat Well Inc. selling furniture and equipment to the local Homeless Shelter, the Homeless Shelter is not a customer as defined by IFRS 15, since they are acquiring the assets at a cost-recovery price, not in exchange for goods or services rendered.
- For Better Beats Ltd. and EatWell Inc.'s partnership, they are collaborating on a joint venture to develop a product together, but neither company is acting as a customer in the context of IFRS 15.
- Ester, the chief engineer at ChargeIT Ltd., is not a customer of the start-up company that bought her motorization plans, as she is providing a good (the motorization plans) in exchange for payment, not obtaining goods or services.
