Step 1: Identifying a contract with a customer

Insights into IFRS 15

10 Sep 2025 1 min read

Revenue recognition is a critical aspect of financial reporting for all reporting entities. Ensuring it is applied consistently and comparably across industries and capital markets is essential.

Contents

IFRS 15 ‘Revenues from Contracts with Customers’ provides comprehensive guidance on accounting for revenue recognition. Nonetheless, there are some aspects of IFRS 15 that are complex and can pose practical challenges for reporting entities to apply and implement effectively.

Our ‘Insights into IFRS 15’ series summarises the key areas of the Standard, highlighting some areas that are challenging to apply in practice, to assist reporting entities in understanding how to apply IFRS 15’s requirements.

IFRS 15 introduces the five-step model for revenue recognition which applies specifically to contracts with customers. Given this limitation in scope, the first step of the model is to identify contracts with customers. This article focuses on this step, and explains how to identify a contract with a customer as well as what constitutes a contract within the scope of the Standard.

Insights into IFRS 15