IFRS 15's model focuses on transfer of control and when performance obligations are satisfied. Which concept best describes this focus?

• A. Transfer of control
• B. Transfer of physical goods
• C. Determination of cost of sales
• D. Regulatory approval

Answer: (A)

IFRS 15 centers on when control of the promised goods or services passes to the customer, and revenue is recognized at that moment (or over time as control is sustained). Control means the customer has the ability to direct the use of, and obtain substantially all the remaining benefits from, the asset, and the entity cannot direct those benefits anymore. This focus on when control transfers makes revenue recognition dependent on the actual transfer of economic rights, not merely on physical possession or other events.

It isn’t about transferring physical goods alone, since ownership or physical handover isn’t the sole trigger for revenue. It isn’t about determining cost of sales, which relates to expense timing, nor regulatory approval, which is unrelated to the timing of recognizing revenue. The best fit is transfer of control, which explains when the performance obligations are considered satisfied under IFRS 15.