CFA Level I · CFA Level I Exam · Analyzing Income Statements
Under IFRS 15, the first step in the five-step revenue recognition model is to:
The first step in the IFRS 15 five-step model is identifying the contract with the customer. Only after a contract exists can the entity identify performance obligations, determine and allocate the transaction price, and then recognize revenue as each obligation is satisfied.
- Aidentify the contract with the customerCorrect
- Bdetermine the transaction price
- Cidentify the performance obligations in the contract
Explanation
The five steps are: identify the contract, identify the performance obligations, determine the transaction price, allocate the transaction price, and recognize revenue when (or as) each obligation is satisfied. Identifying the performance obligations is step two and determining the transaction price is step three.
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