IFRS 15 – Symbolic divergence

IFRS 15 – Symbolic divergence

Our IFRS Newsletter: Revenue brings you the latest on the new revenue standard, IFRS 15.


We examine the latest developments on IFRS 15, and what the decisions could mean for you.

Less than a year after publishing their joint standard on revenue recognition, the IASB and the FASB are back in standard-setting mode.

Licences and identifying separate performance obligations were the focus of the Boards’ February meeting, as they agreed to publish proposed amendments to the new standard in these areas.

The changes are intended to address implementation issues in a wide variety of industries, including media, pharmaceuticals, software and telecommunications. 

For a detailed discussion of these developments, read Issue 12 of our IFRS Newsletter: Revenue.  

Divergence between the IASB and the FASB

Crucially, the FASB proposes making more extensive and more detailed changes than the IASB. 

However, the Boards emphasised that the proposed amendments would represent clarifications to the new standard and are not intended to alter its underlying principles.


"It now seems inevitable that the new revenue standard will be amended before it becomes effective – and that different changes will be made to the IFRS and US versions of the standard."


February decisions at a glance

The proposed changes will be released for public comment. The Boards may also consider additional changes at future meetings.

They plan to discuss the effective date of the new standard in Q2 2015.


IASB decisions

FASB decisions


How to determine the nature of an entity’s promise in granting a licence?

Clarify the application of the existing criteria for assessing whether licence revenue is recognised over time or at a point in time.

Recharacterise the nature of licences as either functional intellectual property (point-in-time recognition) or symbolic intellectual property (over time recognition).

When does the exception for sales- and usage-based royalties apply?

Clarify that the exception applies whenever the licence is the predominant item to which the royalty relates, and that a single royalty stream should not be split for accounting purposes.

Does the licences guidance apply when the licence is not distinct?

No action to be taken.

Clarify that in some cases when a licence is not distinct an entity will need to determine its nature in order to appropriately apply the general revenue recognition requirements.

How do contractual restrictions impact identification of the promises?

No action to be taken.

Clarify that contractual restrictions are attributes of the licence and do not affect the identification of the number of promises in the contract.

Identifying performance obligations

When is a promised good or service ‘distinct’ within the context of the contract?

Add examples to illustrate the application of the separation guidance.

Add examples to illustrate the application of the separation guidance.
Re-articulate the principle of ‘separately identifiable’.
Align the indicative factors with the re-articulation of separately identifiable.

How to identify promised goods or services?

No action to be taken.

Clarify that materiality is assessed at the contract level when identifying separate performance obligations in the contract.

Should shipping and handling services be accounted for as a promised service?

Perform outreach activities.

Clarify that shipping and handling activities before the transfer of control are fulfilment activities.
Add a policy election that allows an entity to consider shipping and handling activities after the transfer of control as fulfilment costs.

Visit our IFRS Newsletters page for access to all our latest newsletters on the new revenue standard and other major IFRS topics.

For KPMG’s most recent publications on the new standard, visit our IFRS – Revenue hot topics page.

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