The following statements are NOT correct: A. IFRS 15’s indicators to determine the point in time when a customer obtains control are not factors to consider but rather criteria that have to be met for point in time recognition. B. The indicators to determine the point in time when a customer obtains control of a good or service are individually determinative as to whether the customer has gained control or not. According to IFRS 15, the indicators for determining when a customer obtains control of a good or service are not standalone considerations but rather a set of criteria that need to be met for point-in-time recognition. These criteria help assess whether control has transferred at a specific point in time. They are not individual determinants but rather a collective assessment to establish control transfer. If a performance obligation is not met at a specific point in time, it doesn't automatically imply that control is transferred over time or at a point in time; instead, it suggests a more complex evaluation is needed to identify the pattern of revenue recognition. Therefore, the incorrect statements are A and B.
Understanding IFRS 15: Point in Time vs. Over Time Revenue Recognition in Accounting
IFRS 15 sets out when a performance obligation is satisfied at a point in time. Which one of the following statements is NOT correct? Select all that apply.
A. IFRS 15’s indicators to determine the point in time when a customer obtains control are not factors to consider but rather criteria that have to be met for point in time recognition.
B. The indicators to determine the point in time when a customer obtains control of a good or service are individually determinative as to whether the customer has gained control or not.
C. If a performance obligation is not satisfied at a particular point in time, the presumption is that control transfers over time, in other words, revenue must be recognized over time.
D. If a performance obligation is not satisfied over time, the presumption is that control transfers at a point in time, i.e., revenue must be recognized at a point in time.
