Home IFRS 15 Ep 06 — Putting It All Together
Episode 06 · 8 min Course finale · journal entries day 1 → year 3

Putting It All Together — Mrs. Owusu's Contract End-to-End

// All five steps · journal entries · year-by-year revenue · common pitfalls

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GH₵ 1 · Contract 2 · Obligations 3 · Price 4 · Allocate 5 · Recognise EPISODE 06 · IFRS 15 · THE FINALE Putting It All Together Mrs. Owusu's contract from day 1 to year 3, with journal entries. PRESS PLAY ▶ THE FIVE STEPS · ALL ON ONE PAGE IFRS 15 · STEP-BY-STEP 1 Identify the contract. Five-test gateway → ✓ 2 Find the performance obligations. 5 promises → 3 distinct POs 3 Determine the transaction price. GH₵800k stated → GH₵795k IFRS 4 Allocate the price. 725,438 / 39,750 / 29,813 5 Recognise revenue. Point-in-time at handover · Over-time for services Today: walk the contract day by day Journal entries · year-by-year revenue · common pitfalls. TWO PATTERNS · WHEN A PO BECOMES REVENUE PATTERN A · OVER TIME Recognise as you go. A little revenue each period as the obligation is satisfied. Examples: services, monthly subscriptions, long construction contracts where the customer benefits as work progresses. ↗ GRADUAL CURVE PATTERN B · POINT IN TIME Recognise at one moment. The full revenue triggers when control transfers to the customer. Examples: a finished house at handover, retail goods at the till, a car when keys are handed over. Single delivery moment. ⚡ SUDDEN STEP Each PO must be classified into one of these two — IFRS 15.31. IFRS 15.35 · OVER-TIME TEST · ANY ONE TRIGGERS If just one criterion is met → recognise over time. CRITERION (a) Customer simultaneously receives & consumes benefits as you perform. Cleaning. Security. Lawn care. Maintenance. Subscription services. ↑ TERRAGOLD'S WARRANTY ↑ TERRAGOLD'S MAINTENANCE CRITERION (b) Creating an asset that customer controls while you create it. Building on the customer's land where they take title progressively. — NOT TERRAGOLD'S CASE CRITERION (c) Asset has no alternative use + enforceable right to pay. Custom-built bridge for one city — useless to anyone else if they cancel. — NOT TERRAGOLD'S HOME For TerraGold, only criterion (a) holds — and only for warranty & maintenance. IFRS 15.38 · POINT-IN-TIME · CONTROL TRANSFER MARKERS If none of the over-time criteria fit, look for a single moment. "Control" = the customer can direct the use of the asset and obtain substantially all the remaining benefits from it. FIVE INDICATORS OF CONTROL TRANSFER 1 Present right to payment for the asset. 2 Customer has legal title. 3 Physical possession transferred. 4 Risks & rewards of ownership shifted. 5 Customer accepted the asset. No single indicator is decisive — the entity weighs them together. HOME · POINT IN TIME · DAY 720 Mrs. Owusu doesn't occupy or control the house during construction. Title transfers at handover. Risks & rewards transfer then. None of (a)/(b)/(c) apply. RECOGNITION · ALL OR NOTHING AT HANDOVER Days 1–719 (construction): no revenue recognised on the home. ⚡ Day 720 (handover): GH₵725,438 recognised in one entry. Day 721 onwards: home revenue is fully booked. Costs of construction also realised. ⚡ POINT IN TIME · 725,438 ON DAY 720 In Ghana, off-plan home sales typically follow this pattern unless the contract gives the buyer control during build. WARRANTY SERVICE · OVER 24 MONTHS Mrs. Owusu receives benefit each month — repair call-outs, scheduled checks. Criterion (a) of IFRS 15.35 fits perfectly — simultaneous receive and consume. RECOGNITION SCHEDULE · GH₵39,750 / 24 MONTHS Total allocated: 39,750. Service period: 24 months from handover. Pattern: time-based, even spread (no specific output measure available). $ Per month: 39,750 ÷ 24 = ~1,656 cedis recognised every month. ↗ OVER TIME · 1,656 / MONTH FOR 24 MONTHS Slow drip of revenue over two years — matches the pattern of value delivered. WARRANTY · MONTHLY REVENUE CALCULATION EVEN-SPREAD CALCULATION Allocated price for warranty GH₵ 39,750 ÷ Months of service 24 Monthly revenue ~1,656 JOURNAL ENTRY · EACH MONTH FOR 24 MONTHS (FROM HANDOVER) DR Contract liability 1,656 CR Revenue — warranty service 1,656 COMMON-AREA MAINTENANCE · OVER 12 MONTHS Lawns. Security. Lighting. The pool. Mrs. Owusu benefits each month. Same logic as the warranty — criterion (a) holds. Recognise over time. CALCULATION Allocated price for maintenance GH₵ 29,813 ÷ Months of service 12 Monthly revenue ~2,484 Twelve monthly entries of GH₵2,484 each, then the maintenance obligation is fully satisfied. COURSE COMPLETE · WELL DONE The five-step model is now in your hands. 1. Identify the contract. 2. Find the performance obligations. 3. Determine the transaction price. 4. Allocate the price. 5. Recognise as each obligation is satisfied. Final quiz earns your CPD certificate for IFRS 15. Then on to the next standard. IFRS 9. IFRS 16. IAS 16… TAKE THE QUIZ → Pass the quiz to earn your CPD certificate. RESULT IFRS 15 series complete · CPD certificate
NARRATOR · KOJO Welcome to Episode 1 of IFRS 15. Press the play button below to begin.
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