Paragraph BC129 states that the Commission has included the criterion in paragraph 35(b) to „address situations where the performance of an entity creates or enhances an asset that a client clearly controls when the asset is created or enhanced.“ Accordingly, the Panel noted that when applying paragraph 35(b), an entity considers whether there is evidence that the client clearly controls the asset being created or improved (p.B the partially constructed property) at the time of its creation or expansion. A company considers all relevant factors in this assessment – not a single factor is decisive. The company`s promise to transfer the good or service is identifiable separately from other promises in the contract (i.e., the promise to transfer the good or service is different under the contract). Paragraph 69(b) of IAS 38 includes expenditures related to training activities as an example of expenses incurred „to provide an entity with future economic benefits, but no intangible assets or other assets that can be recognised are acquired or created“. Consequently, paragraph 69 clarifies that such training expenditure is recognised as an expense when it arises. Paragraph 15 of IAS 38 states that „an entity generally does not have sufficient control over the expected future economic benefits resulting from a team of qualified personnel and training for those elements in order to meet the definition of an intangible asset“. In the agenda decision „Recognition of revenue in a real estate contract involving the transfer of land“, issued in March 2018, the Panel examines a factual model in the construction of real property for which it concludes that the criterion of paragraph 35 (b) is met. With respect to the promise to transfer the land, the land is not consumed immediately (therefore, IFRS 15 35(a) is not met) and the entity`s performance does not create or improve the land (therefore, IFRS 15 35(b) and 35(c) criteria are not met). Although the customer may resell or pledge his contractual right to the indivisible part of the land and the multi-family complex during the construction of the real estate unit, he is not able to sell or pledge the partially built real estate unit himself before the completion of the construction. The Board noted that the principle set out in paragraph 31 of IFRS 15 for revenue recognition requires that the customer has taken control of a promised good or service. Therefore, and as noted above, the underlying objective of the test set out in paragraph 35(c) is to determine whether the entity transfers control of goods or services to the customer while creating an asset for that customer.
In accordance with this purpose, it is the payment to which the Company is entitled under the existing contract with the Client for the performance of this Agreement that is relevant to determining whether the Company has an enforceable right to payment for the service provided to date. The consideration that the company receives from the third party in the resale contract is consideration in relation to this resale contract – it is not a payment for performance under the existing contract with the customer. Paragraph 95 of IFRS 15 requires an entity to recognise an asset from the costs incurred in performing a contract with a customer where the costs do not fall within the scope of another IFRS and those costs meet the three criteria set out in paragraph 95. Therefore, before assessing the criteria set out in paragraph 95, an entity shall first assess whether the training costs incurred in performing the contract fall within the scope of another IFRS. Based on the factual model described in the request, the Committee concluded that none of the criteria set out in paragraph 35 of IFRS 15 were met. Therefore, an entity would recognise revenue at some point in time using paragraph 38 of IFRS 15. Before applying paragraph 35, an entity shall apply paragraphs 22 to 30 to identify any promise to transfer to the customer a good or service that is different as a performance obligation. The Committee included explanatory information on the application of paragraphs 22 to 30 to real estate contracts in its resolution of the agenda „Recognition of income in a real estate contract involving the transfer of land“ published in March 2018. It should be noted that in question 1, the applicant did not ask whether each of the activities related to the construction of a building is different from each other (e.g.B. site clearance, engineering, procurement, etc.) – the construction work as a whole is presumed to be a single obligation to perform for the purposes of personnel analysis […].