How IFRS 15 does interacts with other accounting standards?
The implementation of IFRS 15 has an impact on and interactions with several other International Financial Reporting Standards (IFRSs). Here are some notable interactions:
- IFRS 9 Financial Instruments: IFRS 15 may affect the timing of recognizing contract assets and the amount of revenue recognized, which could impact the expected credit losses model under IFRS 9.
- IAS 10 Events after the Reporting Period: If an entity identifies a contract modification or price revision after the reporting period but before the financial statements are authorized for issue, the entity might need to consider the implications of IAS 10 in conjunction with IFRS 15.
- IAS 12 Income Taxes: The timing and amount of revenue recognition under IFRS 15 may affect the timing of recognizing deferred tax assets or liabilities under IAS 12.
- IAS 16 Property, Plant, and Equipment and IAS 38 Intangible Assets: If an entity sells an asset and also promises to provide future services related to the sold asset, the entity will need to apply both IFRS 15 and the relevant standard (IAS 16 or IAS 38) to account for the different components of the contract.
- IAS 36 Impairment of Assets: Changes in revenue recognition due to IFRS 15 may also affect the assessment of impairment of assets under IAS 36.
- IFRS 16 Leases: For lease contracts that contain lease and non-lease components, entities will apply both IFRS 15 and IFRS 16. IFRS 15 will be used to allocate the consideration in the contract between lease and non-lease components.
Given the breadth and depth of IFRS 15, it is crucial for entities to consider the potential impacts on and interactions with other accounting standards when implementing and applying it.