This document provides an overview of BFRS 15 (Revenue from Contracts with Customers), including key definitions, the 5-step model for recognizing revenue, and disclosure requirements. It summarizes the major changes from earlier standards, scope and entities covered by BFRS 15. The 5-step model is explained as identifying contracts and performance obligations, determining transaction price, allocating price to obligations, and recognizing revenue when obligations are satisfied. Requirements for disclosing contract balances, disaggregating revenue, and other transaction price related items are also summarized.

1. Revenue from
Contracts with
Customers
BFRS 15

2. Membership and Association:
 Member of Council of ICAB (Highest Governing Body)
 Ex Member of Dhaka Regional Committee of ICAB
 Member of Institute of Internal Auditors - Bangladesh
 Life member of Gulshan North Club
 Life member of Banani Society
 Member Gulshan Health Club
 Active Rotarian.
As part of professional development programmers, Mr. Mahamud participated in large number of
training programs, seminars and workshops in the area of Financial Planning, Business
Integration, Merger & Takeover and Leadership & Change Management & IFRS in Singapore,
Thailand, India, Sri Lanka, Malaysia, UK and Indonesia etc.
Mr. Mahamud conducted a number of
training programs on IFRS, Contemporary
Assurances & Corporate Reporting issues,
Leadership & Business Performance
Evaluation for participant from various
leading MNCs and local conglomerates,
Bangladesh Bank, National Board of Revenue
& University Teachers. As a visiting resource
person, he also taught in some of the leading
business schools/Institute (ICAB/National
University).
Mahamud Hosain FCA is business graduate, fellow member of the Institute of
Chartered Accountants of Bangladesh [ICAB] and has diversified experience of
above 13 years in financial planning, financial system & control design, advisory
services in business integration & transition and project management
Paper Presenter

3. Revenue recognition and measurement is crucial to reporting financial
performance.
An effective and credible accounting standard on revenue is
essential to ensure capital market confidence
Convergence between GAAP & IFRS
BFRS 15 ….. Business Context & background
Mahamud Hosain FCA

4. BFRS 15 …..replace/supersedes
BFRS 15 replaces/supersedes the following
standards and interpretations:
BAS 11 Construction Contracts [1979]
BAS 18 Revenue [1982]
IFRIC 13 Customer Loyalty Programmes
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 18 Transfers of Assets from Customers
SIC 31 Revenue - Barter Transactions Involving Advertising Services,
Mahamud Hosain FCA

5. Major Changes from Earlier Standards
Current Requirements New Requirements
BAS 11: Construction Contracts
BAS 18: Sales of Goods
BAS 18: Sales of Services
IFRIC 15 : Real Estate Sales
BFRS 15: Revenue from Customer
Contracts
Over time or at a point in time
BAS 18: Royalties
BFRS 15: New guidelines on royalties
revenue
IFRIC 13: Customer Loyalties Program BFRS 15 New guidelines with option of
additional goods/services & breakageIFRIC 18 : Transfer of Assets from
Customer
SIC 31 : Advertising Barter Transactions
BFRS 15: Guidance on non cash
considerations
Previously less guidelines on cost of
obtaining and fulfilling a contract
BFRS 15: New guidance on cost of
obtaining and fulfilling a contract
BAS 18: Interest
BAS 18: Dividend
BAS 39: Interest
BFRS 9: Dividend
Mahamud Hosain FCA

6. to
all
contracts
with
customers
Except:
BAS 17 Leases;
financial instruments and other contractual rights or
obligations within the scope of BFRS 9
BFRS 10 Consolidated Financial Statements,
BFRS 11 Joint Arrangements,
BAS 27 Separate Financial Statements,
BAS 28 Investments in Associates and Joint Ventures;
insurance contracts within the scope of BFRS 4; and
non-monetary exchanges between entities in the same line of
business to facilitate sales to customers or potential
customers
Scope_An entity shall apply this Standard
Mahamud Hosain FCA

7. - provides a single, principles based five-step model ;
Specific & improved guidelines of BFRS 15
- guide how and when an entity shall recognise revenue;
- require more informative, relevant disclosures.
- Methodical approach (similar to FASB Guidelines)
Mahamud Hosain FCA
However, Application of this guidance will depend on the facts
and circumstances present in a contract with a customer and
will require the exercise of judgment.

8. BFRS 15’s core principle is: an entity will recognise revenue
to depict-
To establish principle based guidelines:-
- the transfer of promised goods or services to customers
in an amount
-that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or
services.
An entity shall consider the terms of the
contract and all relevant facts and
circumstances when applying this Standard
Mahamud Hosain FCA

9. the nature;
the amount;
uncertainty of revenue; and
cash flows arising from a contract with a customer.
[employs significant emphasis on cash flow]
Value addition of BFRS 15 for disclosures..
It establishes the principles that an entity shall apply to report useful
information to users of financial statements about :-
IASB has made clear cut guidelines in respect of
coverage by another standards
Timing;
Mahamud Hosain FCA

10. Definition…
Contract liability
An entity’s obligation to transfer goods or services to a customer for which the
entity has received consideration (or the amount is due) from the customer.
Contract asset
An entity’s right to consideration in exchange for goods or services that the
entity has transferred to a customer when that right is conditioned on something
other than the passage of time (for example, the entity’s future performance).
Customer : A party that has contracted with an entity to obtain goods or
services that are an output of the entity’s ordinary activities in exchange
for consideration.
Contract: An agreement between two or more parties that
creates enforceable rights and obligations.
Mahamud Hosain FCA

11. Definition…
Stand-alone selling price (of a good or service)
The price at which an entity would sell a promised good or service separately
to a customer
Transaction price
The amount of consideration to which an entity expects to be entitled in exchange for
transferring promised goods or services to a customer, excluding amounts collected on behalf
of third parties.
Performance obligation
A promise in a contract with a customer to transfer to the customer either:
• a good or service (or a bundle of goods or services) that is distinct; or
• a series of distinct goods or services that are substantially the same and that have the
same pattern of transfer to the customer.
Mahamud Hosain FCA

12. Identify the contract(s) with a customer
Identify the performance obligations in the contract
Determine the transaction price (Amount)
Allocate the transaction price to the performance
obligations in the contract (How much)
Recognise revenue when (or as) the entity satisfies a
performance obligation
Five steps model….
Step 1
Step 2
Step 3
Step 4
Step 5
Mahamud Hosain FCA

13. the contract has been approved by the parties to the contract
the contract has commercial substance [(ie the risk,
timing]
it is probable that consideration is collectible
Step 1
the payment terms for the goods or services to be
transferred can be identified :Definite
Identify the contract with the customer
An entity shall account for a contract with a customer only when
all of the following criteria are met:-
each party’s rights in relation to the goods or services which
to be transferred can be identified: Definite
Mahamud Hosain FCA

14. a good or service (or a bundle of goods or services)
that is distinct; or
Step 2
a series of distinct goods or services that are
substantially the same and that have the same
pattern of transfer to the customer
Identifying performance obligations
At contract inception, an entity shall :-
(i) assess the goods or services promised in a contract with a
customer; &
(ii) identify as a performance obligation each promise to transfer to
the customer either
Mahamud Hosain FCA

15. The transaction price is the amount to which an entity expects to be
entitled in exchange for the transfer of goods and services. When making
this determination, an entity will consider past customary business
practices
Step 3
Where a contract contains elements of variable consideration, the
entity will estimate the amount of variable consideration to which
it will be entitled under the contract.
Determine the transaction price
When (or as) a performance obligation is satisfied, an entity shall
determine the attributable portion of transaction price to recognise
revenue
uncertainty relating to variable consideration shall be taken under
consideration by limiting the amount of variable consideration that can be
recognised.
Mahamud Hosain FCA

16. To meet the allocation objective, an entity shall allocate the transaction price to
each performance obligation identified in the contract on a relative stand-alone
selling price
Step 4
Allocating the transaction price to performance obligations
when allocating the transaction price it shall be allocated to each performance obligation (or
distinct good or service) in an amount that depicts the amount of consideration to which the
entity expects to be entitled in exchange for transferring the promised goods or services to the
customer
Where consideration is paid in advance or in arrears, the entity will need to consider
whether the contract includes a significant financing arrangement and, if so, adjust
for the time value of money
Mahamud Hosain FCA

17. Control of an asset is defined as the ability to direct the use of and obtain
substantially all of the remaining benefits from the asset. This includes the ability to
prevent others from directing the use of and obtaining the benefits from the asset.
Step 5
Recognise revenue when (or as) the entity satisfies a performance obligation
Revenue is recognised as control is passed, either over time or at a
point in time.
using the asset to produce goods or provide services;
The benefits related to the asset are the potential cash flows that may be obtained
directly or indirectly. These include, but are not limited to:
using the asset to enhance the value of other assets;
using the asset to settle liabilities or to reduce expenses
selling or exchanging the asset
pledging the asset to secure a loan; and
holding the asset.
Mahamud Hosain FCA

18. Presentation
An entity shall present the contract in the statement of financial
position as a contract asset or a contract liability
the entity shall present the contract as a contract liability
when the payment is made or the payment is due (whichever is
earlier).
the entity shall present the contract as a contract asset, If
an entity performs its obligation before the customer pays
consideration or before payment is due
Disclosure of impairment
Any difference between the initial recognition of a receivable and
the corresponding amount of revenue recognised should also be
presented as an expense, for example, an impairment loss
Mahamud Hosain FCA

19. Disclosure
Contracts with customers:
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:
revenue recognised from contracts with customers, which the entity shall disclose
separately from its other sources of revenue; and
any impairment losses recognised (in accordance with BFRS 9) on any receivables or
contract assets arising from an entity’s contracts with customers, which the entity shall
disclose separately from impairment losses from other contracts.
Mahamud Hosain FCA

20. Presentation
When either party to a contract has performed, an entity shall present
the contract in the statement of financial position as a contract asset or
a contract liability
If a customer pays consideration, or an entity has a right to an amount of
consideration that is unconditional (ie a receivable), before the entity transfers a
good or service to the customer, the entity shall present the contract as a
contract liability when the payment is made or the payment is due (whichever is
earlier).
If an entity performs by transferring goods or services to a customer before the
customer pays consideration or before payment is due, the entity shall present
the contract as a contract asset, excluding any amounts presented as a
receivable.
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. If an entity uses an alternative description for a contract
asset, the entity shall provide sufficient information for a user of the financial
statements to distinguish between receivables and contract assets.
Mahamud Hosain FCA

21. Contract balances; opening, closing & movements
Other major Disclosure…
An entity shall disclose all of the following:
Performance obligations;
Transaction price allocated to the remaining performance obligations
Determining the transaction price and the amounts allocated to performance
obligations
Assets recognised from the costs to obtain or fulfil a contract with a customer
Determining the timing of satisfaction of performance obligations
Practical expedients/Measure: If an entity elects to use the practical expedient the
entity shall disclose that fact.
Mahamud Hosain FCA

22. Questions
Answers
&
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23. Thank You!
Thank You!
Mahamud Hosain FCA