Consideration payable to a customer

70 The consideration payable to a customer includes cash amounts that an entity pays, or expects to pay,
to the customer. It also includes credit or other items, such as coupons and vouchers, that can be applied
against amounts owed to the suppliers and to the other entities that the company indebted to. Consideration
payable to a customer should be accounted as a reduction of the transaction price and revenue, unless the
payment was identified as an exchange for a distinct good. If there is a variable amount included in the
consideration payable to a customer, an entity should estimate the transaction price which includes
assessing whether the consideration is constrained.

71 If consideration payable to a customer was known to be a payment for a distinct good or service from
the customer, then it should be accounted in the purchase of the goods or services just an entity accounted
it in the same manner for other purchases from suppliers. Meanwhile, if the amount of consideration payable
to the customer exceeds the fair value of the distinct good or service that the entity receives from the
customer, then the entity would account it for such an excess as a reduction of the transaction price. And if
there is no reasonable estimate for fair value of the good or service received from the customer, then it
should be accounted for all of the consideration payable to the customer as a reduction of the transaction
price.

72 An entity shall recognize the reduction of revenue if consideration payable to a customer is accounted
for as a reduction of the t ransaction price, when the later of either of the following events occurs:

 the entity recognizes revenue for the transfer of the related goods or services to the customer;
 the entity pays or promises to pay the consideration even if the payment is conditional on a future
event and the promise might be implied by the entity’s customary business practices.

Allocating the transaction price to performance obligations

73 The main objective of allocation the transaction price is to apportion the transaction price to each
performance obligation in an amount that represent the cost of consideration to which the entity expects to
be entitled in exchange of transferring the promised goods or services to the customer.

74 To meet the allocation objective, an entity should allocate the transaction price to each performance
obligation identified in the contract on a relative stand-alone selling price, except for allocating discounts
and for allocating consideration that includes variable amounts as stated in paragraphs 84–86.

75 Allocation based on stand-alone selling prices do not apply if a contract has only one performance
obligation. However, Allocation of variable consideration may be applied if an entity promises to transfer
a series of distinct goods or services identified as a single performance obligation and the promised
consideration includes variable amounts.
Allocation based on stand-alone selling prices

76 The apportionment of the transaction price to every performance obligation to the relative stand-alone
selling price would determine the stand alone selling price at contract inception of the distinct good or
service based on the performance obligation in the contract and the allocation must be proportion to the
prices.

77 The stand-alone selling price is the selling price of a promised good or service to a customer separately.
It should not presumed that the contractually stated or list price of a good or service is the stand-alone
selling price of the good and services.

78 An entity shall estimate the stand-alone selling price at the amount that would result in the allocation of
the transaction price in accordance with its objective when the stand-alone selling price is not directly
observable. In terms of the estimation of the price, the entity should consider all information that are
available to the entity which includes market conditions, entity-specific factors about the customers. In
addition, it is the entity’s responsible to maximize their use of observable inputs and their estimation
methods that would be applied consistently in similar circumstances.

79 Suitable methods for estimating the stand-alone selling price of a good or service include, but are not
limited to, the following:

(a) Adjusted market assessment approach which an entity can evaluate the market in which it sells
goods or services and estimate the price that a customer in that market would be willing to pay for
those goods or services and this also include referring to prices from the entity’s competitors for
similar goods or services and adjusting those prices as necessary to reflect the entity’s costs and
margins.

(b) Expected cost plus a margin approach which an entity could forecast its expected costs of
satisfying a performance obligation and then add an appropriate margin for that good or service.

(c) Residual approach is an approach wherein an entity may estimate the stand-alone selling price
by reference to the total transaction price less the sum of the observable stand-alone selling prices
of other goods or services promised in the contract. This might be use to estimate the stand-alone
selling price of a good or service only if one of the following criteria is met:

(i) the entity sells the same good or service to different customers for a broad range of
amounts; or

(ii) the entity has not yet established a price for that good or service and the good or service
has not previously been sold on a stand-alone basis.

80 Estimation of stand- alone selling prices could be possible if the combination of methods is used in the
goods or services promised in the contract if two or more of those goods or services have highly variable
or uncertain stand-alone selling prices. When an entity uses a combination of methods to estimate the stand-
alone selling price of each promised good or service in the contract, the entity should evaluate whether the
apportionment of the transaction price would be consistent with the allocation objective and the
requirements for estimating stand-alone selling prices.
Allocation of a discount

81 A customer receives a discount if the entity purchaseda bundle of goods or services if the sum of the
stand-alone selling prices of those promised goods or services in the contract exceeds the promised
consideration in a contract. Except when an entity has observable evidence in accordance that the entire
discount relates to only one or more, but not all, performance obligations in a contract, the entity shall
allocate a discount proportionately to all performance obligations in the contract. The proportionate
allocation of the discount in those circumstances is a consequence of the entity allocating the transaction
price to each performance obligation on the basis of the relative stand-alone selling prices of the underlying
distinct goods or services.

82 An entity shall allocate a discount entirely to one or more, but not all, performance obligations in the
contract if all of the following criteria are met:

(a) the entity regularly sells each distinct good or service in the contract on a stand-alone basis;

(b) the entity also regularly sells on a stand-alone basis a bundle of some of those distinct goods or
services at a discount to the stand-alone selling prices of the goods or services in each bundle; and

(c) the discount attributable to each bundle of goods or services is substantially the same as the
discount in the contract and an analysis of the goods or services in each bundle provides observable
evidence of the performance obligation to which the entire discount in the contract belongs.

83 If a discount is allocated entirely to one or more performance obligations in the contract , the entity shall
allocate the discount before using the residual approach to estimate the stand-alone selling price of a good
or service.

Allocation of variable consideration

84 Variable consideration that is promised in a contract may be attributable to the entire contract or to a
specific part of the contract, such as either of the following:

(a) one or more, but not all, performance obligations in the; or

(b) one or more, but not all, distinct goods or services promised in a series of distinct goods or
services that forms part of a single performance obligation.

85 An entity shall allocate a variable amount entirely to a performance obligation or to a distinct good or
service that forms part of a single performance obligation if both of the following criteria are met:

(a) the terms of a variable payment relate specifically to the entity’s efforts to satisfy the
performance obligation or transfer the distinct good or service; and

(b) allocating the variable amount of consideration entirely to the performance obligation or the
distinct good or service is consistent with the objective when considering all of the performance
obligations and payment terms in the contract.
86 The allocation requirements shall be applied to allocate the remaining amount of the transaction price
that does not meet the criteria.

Changes in the transaction price

87 The transaction price can varies after the contract inception which includes the resolution of uncertain
events or other changes in circumstances that change the amount of consideration.

88 The changes that occur in the transaction price must be proportionate to the performance obligation,
thus, changes in stand-alone selling prices must not apportion to the transaction price at the inception of
the contract. The amount for the satisfied performance obligation must accounted as either of the
revenue or reduction of the revenue when the transaction price varies

89 The change in the transaction price shall be allocated to one or more but not to all of the obligation or
to the promised goods or services in a series that forms part of a single performance obligation only if the
criteria on allocating variable consideration are met.

90 Changes in the transaction price that results from contract modification shall be accounted by the entity
and if there is change after the contract modification in the transaction price, the entity must apply the
following ways which is applicable in the allocation of the change of the transaction price:

(a)The changes in the transaction price shall be allocated in the identified performance obligation
that occurs before the modification and if it is considered as attributable to the variable amount
consideration promised prior to the modification, then the modification must be accounted as if it
is for termination of existing contract and creation of new one.

(b) If the modification of the contract was not accounted as a separate contract, then the allocation
of changes in the transaction price shall be accounted in the modified contract.

Contract costs

91 An incremental cost can be recognized as an asset of obtaining a contract with a customer only if the
entity recovers its cost.

92 The incremental costs of obtaining a contract defined as the costs to obtain customers wherein it could
just be incurred if a contract have been made.

93 Cost in obtaining a contract is recognized as an expense even if the contract was obtained, unless it is
explicitly chargeable to the customer regardless whether a contract has been made.

94 An entity may recognize the incremental costs of obtaining a contract as an expense when the
amortization period of the asset of the entity is one year or less.

Costs to fulfil a contract

95 If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard
such as IAS 2, IAS 16 or IAS 38, then the entity must recognize an asset as cost incurred to fulfill a contract
if the cost has met all of following criteria:

(a) costs relate directly to a contract or to an anticipated contract that the entity can specifically
identify;

(b) costs generate or enhance resources of the entity that will be used in satisfying (or in continuing
to satisfy) performance obligations in the future; and

(c) costs are expected to be recovered.

96 An entity shall account those costs incurred in fulfilling a contract with a customer in accordance with
those other Standards.

97 Costs that relate directly to a contract or a specific anticipated contract include any of the following:
(a) direct labour
(b) direct materials
(c) allocations of costs that relate directly to the contract or to contract activities;
(d) costs that are explicitly chargeable to the customer under the contract; and
(e) other costs that are incurred only because an entity entered into the contract

98 An entity shall recognize the following costs as expenses when incurred:

(a) general and administrative cost unless it is explicitly chargeable to customers
(b) costs of wasted materials, labour or other resources to fulfil the contract that were not reflected
in the price of the contract;
(c) costs that relate to satisfied performance obligations in the contract; and
(d) costs for which an entity cannot distinguish whether the costs relate to unsatisfied performance
obligations or to satisfied performance obligations.

Amortization and impairment

99 An asset recognized in accordance of the incremental costs that obtained shall be amortized on a
systematic basis which is consistent with the transfer of goods or services to the customer of asset relates.
The asset may relate to goods or services to be transferred under a specific anticipated contract.

100 An entity shall update the amortization to reflect a significant change in the entity’s expected timing of
transfer to the customer of the goods or services to which the asset relates and the changes incurred must
be accounted as a change in accounting estimate.

101 An entity shall recognize an impairment loss in profit or loss to the extent that the carrying amount of
an asset recognized from incremental cost exceeds the following:

(a) the remaining amount of consideration that the entity expects to receive in exchange for the
goods or services to which the asset relates; less

(b) the costs that relate directly to providing those goods or services and that have not been
recogniszed as expenses.
102 An entity shall use the principles for determining the transaction price and the amount of consideration
that the entity must receive and this must reflect in the customer’s credit risk.

103 Prior to the recognition of the impairment loss of an asset, the entity shall recognise any impairment
loss for assets related to the contract that are recognised in accordance with another Standard such as IAS
2, IAS 16 and IAS 38. On the other hand, an entity shall also include the resulting carrying amount of the
asset of the cash-generating unit to which it belongs for the purpose of applying IAS 36.

104 An entity shall recognize a reversal of some or all of an impairment loss previously recognized in profit
or loss when the impairment conditions no longer exist or have improved. Any increase in the carrying
amount shall not exceed the amount determined if there is no prior impairment loss recognized.

Presentation

105 An entity shall present the contract in the statement of financial position as a contract asset or a contract
liability, depending on the relationship between the entity’s performance and the customer’s payment
whether the party has performed or not and it shall also present any unconditional rights to consideration
separately as a receivable.

106 If a customer pays consideration, or an entity has a right to an amount of consideration that is
unconditional prior to the transfer of goods or services of the entity to the customers, the entity shall present
the contract as a contract liability when the payment is made or the payment is due to whichever is earlier
and this contract liability is entity’s obligation to transfer goods or services to a customer for which the
entity has received consideration.

107 The entity shall present the contract as contract asset prior to the transfer of goods or service on or
before payment be due or be settle by the customer and this excludes the receivables. A contract asset is an
entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer.
An entity shall assess a contract asset for impairment in accordance with IFRS 9. An impairment of a
contract asset shall be measured, presented and disclosed on the same basis as a financial asset that is within
the scope of IFRS 9.

108 A receivable is an entity’s right to consideration that is unconditional. A right to consideration is

unconditional if only the passage of time is required before payment of that consideration is due. An entity
shall account for a receivable in accordance with IFRS 9. In the initial recognition of the receivable, any
difference from the receivable measured under IFRS 9 and the amount of revenue that shall be accounted
and be recognized as expense.

109 This Standard uses the terms ‘contract asset’ and ‘contract liability’ but does not prohibit an entity from
using alternative descriptions in the statement of financial position for those items and shall present all of
the sufficient information if it uses an alternative description for the contra asset to distinguish its difference
from the other.

Disclosure
110 The objective of the disclosure requirements is for an entity to disclose sufficient information to enable
users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash
flows arising from contracts with customers. The disclosure of qualitative and quantitative information
about all of the following shall be made to meet the objective:

(a) its contracts with customers

(b) the significant judgements, and changes in the judgements, made in applying this Standard to
those contracts; and
(c) any assets recognised from the costs to obtain or fulfil a contract with a customer.

111 An entity shall consider the level of detail necessary to satisfy the disclosure objective and how much
emphasis to place on each of the various requirements. An entity shall aggregate or disaggregate disclosures
so that useful information is not obscured by either the inclusion of a large amount of insignificant detail
or the aggregation of items that have substantially different characteristics.

112 An entity need not disclose information in accordance with this Standard if it has provided the
information in accordance with another Standard.

Contracts with customers

113 An entity shall disclose all of the following amounts for the reporting period unless those amounts are
presented separately in the statement of comprehensive income in accordance with other Standards:

(a) revenue recognized from contracts with customers, which the entity shall disclose separately
from its other sources of revenue; and

(b) any impairment losses recognized on any receivables or contract assets arising from an entity’s
contracts with customers that must be disclose separately from impairment losses.

Disaggregation of revenue

114 An entity shall disaggregate revenue recognized from contracts with customers into categories that
depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic
factors.

115 The entity shall disclose sufficient information to enable users of financial statements to understand
the relationship between the disclosure of disaggregated revenue and revenue information that is disclosed
for each reportable segment, if the entity applies IFRS 8 Operating Segments.

Contract balances

116 An entity shall disclose all of the following:

(a) the opening and closing balances of receivables, contract assets and contract liabilities from
contracts with customers, if not otherwise separately presented or disclosed;

(b) revenue recognised in the reporting period that was included in the contract liability balance at
the beginning of the period; and
 (c) revenue recognised in the reporting period from performance obligations satisfied (or partially
satisfied) in previous periods.

117 An entity shall explain how the timing of satisfaction of its performance obligations relates to the
typical timing of payment and the effect that those factors have on the contract asset and the contract liability
balances.

118 An entity shall provide an explanation of the significant changes in the contract asset and the contract
liability balances during the reporting period. The explanation shall include qualitative and quantitative
information. Examples of changes in the entity’s balances of contract assets and contract liabilities include
any of the following:

(a) changes due to business combinations;

(b) cumulative catch-up adjustments to revenue that affect the corresponding contract asset or
contract liability, including adjustments arising from a change in the measure of progress, a change
in an estimate of the transaction price which includes changes in the assessment of the estimate
variable is a constrained or a contract modification;

(c) impairment of a contract asset;

(d) a change in the time frame for a right to consideration to become unconditional; and

(e) a change in the time frame for a performance obligation to be satisfied Performance obligations

119 An entity shall disclose information about its performance obligations in contracts with customers,
including a description of all of the following:

(a) when the entity typically satisfies its performance obligations, including when performance
obligations are satisfied in a bill-and-hold arrangement;

(b) the significant payment terms;

(c) the nature of the goods or services that the entity has promised to transfer, highlighting any
performance obligations to arrange for another party to transfer goods or services;

(d) obligations for returns, refunds and other similar obligations; and

(e) types of warranties and related obligations.

Transaction price allocated to the remaining performance obligations

120 An entity shall disclose the following information about its remaining performance obligations:
 (a) the aggregate amount of the transaction price allocated to the performance obligations that are
unsatisfied (or partially unsatisfied) as of the end of the reporting period; and

(b) an explanation of when the entity expects to recognize as revenue the amount disclosed in
transaction price, which the entity shall disclose in either of the following ways:

(i) on a quantitative basis using the time bands that would be most appropriate for the
duration performance obligations; or

(ii) by using qualitative information.

121 An entity need not disclose the information for a performance obligation if either of the following
conditions is met:

(a) the performance obligation is part of a contract that has an original expected duration of one
year or less; or

(b) the entity recognizes revenue from the satisfaction of the performance obligation

122 An entity shall explain qualitatively whether it is applying the practical and whether any consideration
from contracts with customers is not included in the transaction price and, therefore, not included in the
information to be disclosed.

Significant judgements in the application of this Standard

123 An entity shall disclose the judgements, and changes in the judgements, made in applying this Standard
that significantly affect the determination of the amount and timing of revenue from contracts with
customers. In particular, an entity shall explain the judgements, and changes in the judgements, used in
determining both of the following:

(a) the timing of satisfaction of performance obligations; and

(b) the transaction price and the amounts allocated to performance obligations.

Determining the timing of satisfaction of performance obligations

124 An entity shall disclose both of the following for the performance that the entity satisfies over period
of time:

(a) the methods used to recognize revenue; and

(b) an explanation of why the methods used provide a faithful depiction of the transfer of goods or
services.

125 For performance obligations satisfied at a point in time, an entity shall disclose the significant
judgements made in evaluating when a customer obtains control of promised goods or services.
Determining the transaction price and the amounts allocated to performance obligations

126 An entity shall disclose information about the methods, inputs and assumptions used for all of the
following:

(a) determining the transaction price, which includes, but is not limited to, estimating variable
consideration, adjusting the consideration for the effects of the time value of money and measuring
non-cash consideration;

(b) assessing whether an estimate of variable consideration is constrained;

(c) allocating the transaction price, including estimating stand-alone selling prices of promised
goods or services and allocating discounts and variable consideration to a specific part of the
contract only if applicable; and

(d) measuring obligations for returns, refunds and other similar obligations.

Assets recognized from the costs to obtain or fulfil a contract with a customer

127 An entity shall describe both of the following:

(a) the judgements made in determining the amount of the costs incurred to obtain or fulfil a
contract with a customer; and

(b) the method it uses to determine the amortization for each reporting period.

128 An entity shall disclose all of the following:

(a) the closing balances of assets recognized from the costs incurred to obtain or fulfil a contract
with a customer, by main category of asset; and

(b) the amount of amortization and any impairment losses recognized in the reporting period.

Practical expedients

129 If an entity elects to use the practical expedient in either about the existence of a significant financing
component or about the incremental costs of obtaining a contract, the entity shall disclose that fact.

PFRS 16
Objective

1 This Standard sets out the principles for the recognition, measurement, presentation and disclosure of
leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that
faithfully represents those transactions. This information gives a basis for users of financial statements to
assess the effect that leases have on the financial position, financial performance and cash flows of an entity.

2 An entity shall consider the terms and conditions of contracts and all relevant facts and circumstances
when applying this Standard and this shall apply consistently with similar characteristics and circumstances.

Scope

3 An entity shall apply this Standard to all leases, including leases of right-of-use assets in a sublease, except
for:

(a) leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources;

(b) leases of biological assets within the scope of IAS 41 Agriculture held by a lessee;

(c) service concession arrangements within the scope of IFRIC 12 Service Concession
Arrangements;

(d) licences of intellectual property granted by a lessor within the scope of IFRS 15 Revenue from
Contracts with Customers; and

(e) rights held by a lessee under licensing agreements within the scope of IAS 38 Intangible Assets
for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights.

4 A lessee may, but is not required to, apply this Standard to leases of intangible assets other than those
leases of use of minerals and biological assets, service concession, licenses of intellectual property granted
by lessor and rights held by a lessee.

Recognition exemptions

5 A lessee may elect not to apply the requirements to:

(a) short-term leases; and

(b) leases for which the underlying asset is of low value.

6 If a lessee elects not to apply the requirements to either short-term leases or leases for which the underlying
asset is of low value, the lessee shall recognize the lease payments associated with those leases as an
expense on either a straight-line basis over the lease term or another systematic basis, thus, the lessee shall
apply another systematic basis if that basis is more representative of the pattern of the lessee’s benefit.

7 If a lessee accounts for short-term leases, the lessee shall consider the lease to be a new lease for the
purposes of this Standard if:

(a) there is a lease modification; or

 (b) there is any change in the lease term.

8 The election for short-term leases shall be made by class of underlying asset to which the right of use
relates. The election for leases for which the underlying asset is of low value can be made on a lease-by-
lease basis. A class of underlying asset is a grouping of underlying assets of a similar nature and use in an
entity’s operations.

Identifying a lease

9 The entity shall assess whether the contract is, or contains, a lease at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration.

10 A period of time may be described in the amount of use of an identified asset.

11 An entity shall reassess whether a contract is, or contains, a lease only if the terms and conditions of the
contract are changed.