Variable Consideration IFRS 15 – Definition and Accounting

Variable Consideration IFRS 15 REFERS to the portion of the ‘transaction price’ that depends on uncertain future events, i.e. Performance Obligations, Warranties, Discounts, and Other Incentives that May AFFECT the final payment received by the seller.

IFRS 15 [Revenue from Contracts with Customers] ESTABLISHES the criteria of ‘Revenue Recognition‘, effective from 1st January 2018 and replaced IAS 18, IAS 11, SIC 31, IFRIC 13, IFRIC 15, and IFRIC 18.

Variable Consideration IFRS 15 – Detailed Aspect

It REFERS to the changes in the amount of consideration a company receives for its products or services.

Variable Consideration IFRS 15


  • Discounts;
  • Rebates;
  • Refunds;
  • Concessions;
  • Incentives;
  • Performance Bonuses;
  • Penalties; AND
  • Contingent Payments.

It be ESTIMATED via either:

Expected Value MethodSingle Most Likely Outcome
It is based on the probability of weighted amounts within a particular range.Amount within a range that is Most likely to eventuate.

[Transaction Price INCLUDE ‘variable consideration‘, only if it is highly probable that subsequent change in the estimate would NOT result in reversal of revenue.]

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