This free, guided checker walks your finance team through the key decision points for IFRS 15 Series of Performance Obligations. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Under IFRS 15.22(b) a performance obligation can be a series of distinct goods or services that are substantially the same and have the same pattern of transfer. A series typically arises when the entity repeatedly transfers substantially the same service - monthly SaaS access, recurring cleaning, or daily hotel management. First confirm the goods or services are distinct under IFRS 15.27 before testing the series criteria.
Identify each distinct performance obligation individually under IFRS 15.22(a); series accounting does not apply.
Official guidance: IFRS issued standards
IFRS 15.23 sets two criteria for a series: each distinct good or service would meet the paragraph 35 over-time criteria, and the same method would be used to measure progress toward satisfaction of each. 'Substantially the same' looks to the nature of the promise (for example a daily service), not to minor day-to-day variation. Goods or services delivered at a point in time, or with different progress measures, fail the test.
Each distinct good or service is a separate performance obligation because the IFRS 15.23 series criteria are not met.
Official guidance: IFRS issued standards
IFRS 15.23(a) requires each distinct good or service in the series to meet a paragraph 35 over-time criterion: the customer simultaneously receives and consumes the benefits (35(a)); the entity creates or enhances a customer-controlled asset (35(b)); or the asset has no alternative use and the entity has an enforceable right to payment for performance to date (35(c)). Recurring services usually meet 35(a). If none is met, the item transfers at a point in time and series treatment is unavailable.
Series guidance does not apply where the over-time criteria in IFRS 15.35 fail; account for the items as separate performance obligations (IFRS 15.23).
Official guidance: IFRS issued standards
When the IFRS 15.22(b) and 15.23 criteria are met, the series is a single performance obligation; this is a consequence of the criteria, not an accounting policy choice. Treating the series as one obligation affects allocation, the measure of progress, modification accounting, and remaining-performance-obligation disclosures. Confirm the conclusion is applied consistently across similar contracts.
Account for each distinct delivery as a separate performance obligation (IFRS 15.22(a)).
Official guidance: IFRS issued standards
IFRS 15.26(e) treats standing ready to provide goods or services, or making them available for the customer to use as and when they decide, as a promised service. Determining the nature of the promise - stand-ready versus specified units - drives the measure of progress. A helpdesk or hosting arrangement is usually stand-ready, whereas a fixed number of service visits is a units-delivered promise; the distinction is a key judgement.
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Official guidance: IFRS issued standards
IFRS 15.39-40 require a single method of measuring progress per performance obligation, applied consistently, that faithfully depicts the transfer of control. Output methods (IFRS 15.41) use units, milestones, or time elapsed; input methods (IFRS 15.45) use costs or effort and must be adjusted where inputs do not depict progress. Straight-line (a time-based output measure) suits equal stand-ready services; do not default to it where delivery is uneven.
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Official guidance: IFRS issued standards
IFRS 15.73-74 allocate the transaction price to each performance obligation based on relative standalone selling prices. Because a qualifying series is one performance obligation, allocate to the series as a whole rather than pricing each individual delivery; variable consideration may be allocated entirely to the series or to distinct periods within it under IFRS 15.84-85 where the criteria are met. Do not re-price each period as if it were a separate obligation.
Allocate the transaction price to the series as a single performance obligation using relative standalone selling prices (IFRS 15.73-74).
Official guidance: IFRS issued standards
A straight-line measure is appropriate only where the entity's performance transfers evenly - for example an equal stand-ready service across the term (see IFRS 15 Example 18). Where activity is seasonal, front- or back-loaded, or usage-based, a straight-line measure overstates or understates progress and a different single method under IFRS 15.39-40 is required. Reassess the method if the pattern of benefit changes.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
A renewal option may grant the customer a material right that is itself a performance obligation if it provides a discount the customer would not otherwise receive (IFRS 15.B40). When a renewal is exercised or the terms change, determine whether it is a separate contract (distinct goods or services at standalone selling price, IFRS 15.20) or a contract modification (IFRS 15.21). The recognition period for the series depends on this conclusion.
Assess renewal options for a material right and as a separate contract or modification before finalising the series recognition period (IFRS 15.B40; IFRS 15.20).
Official guidance: IFRS issued standards
IFRS 15.120 requires disclosure of the aggregate transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at period end, and when the entity expects to recognise that amount as revenue. Practical expedients in IFRS 15.121 may exempt contracts with an original expected duration of one year or less, or where revenue is recognised from the amount the entity has a right to invoice. Track the unsatisfied series consideration to build this disclosure.
Quantify the transaction price allocated to the remaining series obligations and the expected timing of recognition (IFRS 15.120).
Official guidance: IFRS issued standards
A reduction in the scope of a series is a contract modification (IFRS 15.20-21); where the remaining goods or services are distinct and part of the same series it is often accounted for prospectively. A change in the transaction price is allocated on the same basis as at inception and adjusts revenue in the period of change (IFRS 15.87-90), producing a cumulative catch-up for a single over-time obligation. Do not simply stop recognising revenue without remeasuring.
Remeasure the series transaction price and measure of progress for the scope change (IFRS 15.21; IFRS 15.87).
Official guidance: IFRS issued standards
IFRS 15.123-126 require disclosure of the significant judgements, and changes in judgements, that affect the timing of satisfaction of performance obligations and the transaction price - here, why a series is one obligation, why the promise is stand-ready, and the method and inputs used to measure progress. Combine these with the qualitative performance-obligation information in IFRS 15.119. Disclose only what is material to users.
Recognise series revenue over time and disclose the significant judgements and remaining performance obligations (IFRS 15.119; IFRS 15.123). Complete the significant-judgement and remaining-obligation disclosures before finalising series revenue (IFRS 15.123).
Official guidance: IFRS issued standards
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