What is the fifth step in the IFRS 15 five-step model?

• A. Recognise revenue when (or as) a performance obligation is satisfied
• B. Determine the transaction price
• C. Identify the contract
• D. Allocate the transaction price

Answer: (A)

Recognising revenue when the performance obligation is satisfied is the moment you record revenue. In IFRS 15, you go through identifying the contract, identifying the performance obligations, determining the transaction price, and allocating that price to each obligation. The final step is to recognise revenue when you actually transfer control of the promised goods or services to the customer, either over time as you fulfill the obligation or at a point in time when control passes. This ensures revenue matches the transfer of goods or services, not simply when the contract is formed or when the price is set. For example, a product sold with delivery and acceptance happens at delivery; a service contract with ongoing service would recognize revenue over the service period.