Comparing the guidelines of IFRIC 13 and IFRS 15
| Guidelines | IFRIC 13 | IFRS 15 |
|---|---|---|
| Description of the transaction | A client loyalty programme transaction is a single transaction consisting of two separate identifiable components. The selling price in a client loyalty programme transaction includes an amount for subsequent servicing (IFRIC 13 par. 5; IAS 18 par. 13) | An option to acquire additional goods or services for free or at a discount would represent a separate performance obligation if it gives the customer a material right that it otherwise would not have received without entering into the contract. If the option provides a material right to the customer, the customer in effect pays the entity in advance for future goods or services (IFRS 15 par. B40) |
| Timing of revenue recognition | The consideration received or receivable from the sale should be allocated to the goods or services sold and the points granted. The portion allocated to the goods or services sold will be recognised as revenue during the sales transaction. The portion allocated to the points will be recognised as revenue only when the points are exchanged for benefits, and the recognition of this portion of the revenue is therefore deferred (IFRIC 13 par. 5 and 7, IAS 18 par. 13) | An entity must recognise revenue when or as it satisfies performance obligations by transferring control of a good or a service (i.e. the asset) to a customer (IFRS 15 par. 30) |
| Breakage | If a supplier supplies the benefits itself, it shall recognise the consideration allocated to points as revenue when points are exchanged and the supplier fulfils its obligation to supply benefits. The amount of revenue recognised shall be based on the number of points that have been exchanged for benefits, relative to the total number expected to be exchanged (IFRIC 13 par. 7) | If a customer does not exercise all of its rights under the option at once it will result in ‘breakage’ of the contract liability. If an entity is reasonably assured to be entitled to the amount of expected breakage, the entity would recognise the effects of the expected breakage ‘in proportion to the pattern of rights exercised by the customer’ (IFRS 15 par. B46) |
| Allocation between components | The fair value of the consideration received under the initial sale must be allocated between the points and the other components of the sale (IFRIC 13 par. 5) | An entity must allocate the transaction price to each of the identified performance obligations based on the relative stand-alone selling prices of the underlying goods and services. The stand-alone selling price is the price at which an entity would sell a promised good or service separately to a customer, for example the list price of the goods or services (IFRS 15 par. 73–77) |
| Measurement of CLP award credits | The portion of consideration allocated to the points granted in the underlying sales transaction shall be measured by reference to their fair value (IFRIC 13 par 6). If there is not a quoted market price for an identical point, fair value must be measured using another valuation technique. The supplier may measure the fair value of points by reference to the fair value of the benefits they could be exchanged for (IFRIC 13 AG par. 1), in other words, the value of the points (held as an asset) in the hands of the consumer. The fair value of the points takes into account, as appropriate: – the amount of the discounts or incentives that would otherwise be offered to consumers who have not earned points from an initial sale; – the proportion of points that are not expected to be exchanged by consumers; and – non-performance risk (IFRIC 13 AG par. 2) | If the stand-alone selling price for a customer’s option to acquire additional goods or services is not directly observable, an entity shall estimate it. That estimate shall reflect the discount the customer would obtain when exercising the option, adjusted for both of the following: 1) any discount that the customer could receive without exercising the option; and 2) the likelihood that the option will be exercised (IFRS 15 par. B42) |
| Guidelines | IFRIC 13 | IFRS 15 |
|---|---|---|
| Description of the transaction | A client loyalty programme transaction is a single transaction consisting of two separate identifiable components. The selling price in a client loyalty programme transaction includes an amount for subsequent servicing (IFRIC 13 par. 5; IAS 18 par. 13) | An option to acquire additional goods or services for free or at a discount would represent a separate performance obligation if it gives the customer a material right that it otherwise would not have received without entering into the contract. If the option provides a material right to the customer, the customer in effect pays the entity in advance for future goods or services (IFRS 15 par. B40) |
| Timing of revenue recognition | The consideration received or receivable from the sale should be allocated to the goods or services sold and the points granted. The portion allocated to the goods or services sold will be recognised as revenue during the sales transaction. The portion allocated to the points will be recognised as revenue only when the points are exchanged for benefits, and the recognition of this portion of the revenue is therefore deferred (IFRIC 13 par. 5 and 7, IAS 18 par. 13) | An entity must recognise revenue when or as it satisfies performance obligations by transferring control of a good or a service (i.e. the asset) to a customer (IFRS 15 par. 30) |
| Breakage | If a supplier supplies the benefits itself, it shall recognise the consideration allocated to points as revenue when points are exchanged and the supplier fulfils its obligation to supply benefits. The amount of revenue recognised shall be based on the number of points that have been exchanged for benefits, relative to the total number expected to be exchanged (IFRIC 13 par. 7) | If a customer does not exercise all of its rights under the option at once it will result in ‘breakage’ of the contract liability. If an entity is reasonably assured to be entitled to the amount of expected breakage, the entity would recognise the effects of the expected breakage ‘in proportion to the pattern of rights exercised by the customer’ (IFRS 15 par. B46) |
| Allocation between components | The fair value of the consideration received under the initial sale must be allocated between the points and the other components of the sale (IFRIC 13 par. 5) | An entity must allocate the transaction price to each of the identified performance obligations based on the relative stand-alone selling prices of the underlying goods and services. The stand-alone selling price is the price at which an entity would sell a promised good or service separately to a customer, for example the list price of the goods or services (IFRS 15 par. 73–77) |
| Measurement of CLP award credits | The portion of consideration allocated to the points granted in the underlying sales transaction shall be measured by reference to their fair value (IFRIC 13 par 6). If there is not a quoted market price for an identical point, fair value must be measured using another valuation technique. The supplier may measure the fair value of points by reference to the fair value of the benefits they could be exchanged for (IFRIC 13 AG par. 1), in other words, the value of the points (held as an asset) in the hands of the consumer. The fair value of the points takes into account, as appropriate: | If the stand-alone selling price for a customer’s option to acquire additional goods or services is not directly observable, an entity shall estimate it. That estimate shall reflect the discount the customer would obtain when exercising the option, adjusted for both of the following: 1) any discount that the customer could receive without exercising the option; and 2) the likelihood that the option will be exercised (IFRS 15 par. B42) |
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