IFRS 15 introduces a comprehensive framework for determining whether, how much, and when revenue is recognized. This includes specific guidance on accounting for contracts with multiple performance obligations.

A contract with a customer often involves the transfer of multiple goods or services. For instance, a contract may involve the sale of goods, services, or both. Under IFRS 15, an entity must identify each of the distinct goods or services (i.e., each performance obligation) in the contract. A good or service is distinct if the customer can benefit from the good or service on its own or together with other resources readily available to the customer and the entity's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Once the entity identifies the performance obligations, it allocates the transaction price to each performance obligation in proportion to the standalone selling price of each distinct good or service promised in the contract. The standalone selling price is the price at which an entity would sell a promised good or service separately to a customer. If a standalone selling price is not observable, the entity must estimate it.

For example, if a tech company sells a package deal consisting of a computer, a printer, and a two-year technical support service, under IFRS 15, each of these items (the computer, the printer, and the support service) would typically be considered as separate performance obligations as they are distinct. The company would then allocate the transaction price among these three performance obligations based on their relative standalone selling prices.

The entity then recognizes revenue when (or as) it satisfies each performance obligation by transferring a promised good or service to a customer. This can happen over time or at a point in time, depending on the specific terms of the contract. In the example above, revenue for the computer and printer could be recognized at the point of sale, while revenue for the technical support service would be recognized over the two-year service period.