Solution

The contract term in this scenario under IFRS 15 would be considered to be the non-cancellable period of the contract, plus any periods covered by an option to extend the contract if the customer has a significant economic incentive to exercise that option.

In this case, the gym member can cancel their membership without penalty after three months. Therefore, the non-cancellable period of the contract is three months.

However, if the gym member decides to extend the contract after the initial three months, those additional months would also become part of the contract term. The gymnasium should consider whether the member is likely to cancel or not, based on any economic incentives that might exist for them to continue the contract.

If the gymnasium has past experiences or other evidence to suggest that customers typically do not cancel their memberships after the three-month mark, it may indicate that the contract term is 12 months. Otherwise, the contract term would be considered as only three months.

In summary, under IFRS 15, the term of the contract is a minimum of three months (non-cancellable period), with the potential to be extended up to 12 months, depending on the customer's actions and the existence of any significant economic incentives to extend.