PSAK 72 – Revenue

from Contracts with

Customers
A comprehensive look at
the new revenue model
At a glance
On 26 July 2017, the DSAK-IAI issued PSAK 72, a new standard for revenue recognition.
PSAK 72 is adapted from IFRS 15 Revenue from Contracts with Customers. Almost
all entities will be affected to some extent by the significant increase in required
disclosures, but the changes extend beyond disclosures, and the effect on entities
will vary depending on industry and current accounting practices. Entities will need
to consider changes that might be necessary to information technology systems,
processes, and internal controls to capture new data and address changes in financial
reporting.

Background
The objective of the revenue standard (PSAK 72) is to provide a single, comprehensive
revenue recognition model for all contracts with customers to improve comparability
within industries, across industries, and across capital markets.

The revenue standard contains principles that an entity will apply to determine the
measurement of revenue and timing of when it is recognised. The underlying principle
is that an entity will recognise revenue to depict the transfer of goods or services to
customers at an amount that the entity expects to be entitled to in exchange for those
goods or services.

The revenue standard is effective for annual periods beginning on or after 1 January
2020. Early adoption is permitted.

This edition of In depth summarises the new revenue recognition model.

Index

At a glance 1
Background 1
Key provision 3
Scope 18
Step 1 : Identify the contract(s) 23
Step 2: Identify performance obligations 31
Step 3 : Determine the transaction price 32
Step 4 : Allocate the transaction price 34
Step 5 : Recognise revenue 18
Other considerations 23
Disclosures 31
What’s next 32
Appendix: Disclosure requirements 34
Key provisions

Scope
The revenue standard applies to all contracts with PwC observation. Management will need to
customers, except for: evaluate arrangements with collaborators
and partners to identify whether such
• lease contracts;
arrangements or portions thereof are
• insurance contracts; in the scope of the revenue standard.
Arrangements where parties share risks and
• financial instruments and certain contractual
benefits are different from those where one
rights or obligations within the scope of other
standards; entity obtains goods or services from the
other.
• non-monetary exchanges between entities in
the same line of business to facilitate sales to For example, a biotechnology entity that
customers; and has an agreement with a pharmaceutical
entity to share equally in the development
• certain guarantees within the scope of other of a specific drug candidate is unlikely to
standards (other than product or service be in the scope of the standard because
warranties). the parties share the risks and benefits in
Revenue from a transaction or event that does developing the drug. The arrangement is
not arise from a contract with a customer is likely to be in scope if the substance of the
not within the scope of the revenue standard arrangement is that the biotechnology entity
and should continue to be accounted for sells its compound to the pharmaceutical
in accordance with other standards. Such entity and/or provides research and
transactions or events include, but are not limited development services. Management will also
to: dividends; non-exchange-transactions; need to evaluate whether the arrangement
changes in the fair value of biological assets, contains elements of both collaboration with
investment properties and inventory of broker- and a sale to a customer.
traders.
Some contracts include components that are
in the scope of the revenue standard and other The revenue standard generally applies to an
components that are in the scope of other individual contract with a customer, and can be
standards (for example, a contract that includes applied to a portfolio of contracts or performance
both a lease and maintenance services). An entity obligations if the entity reasonably expects
will apply the separation and/or measurement that the effect of applying a portfolio approach
guidance in other standards first and then apply would not differ materially from considering each
the guidance in the revenue standard. An entity contract or performance obligation separately.
will apply the revenue standard to separate and/ Some entities enter into contracts with a large
or measure the components of the contract if number of customers, all of which have the same
other standards do not include separation or or similar terms and conditions. It is appropriate
measurement guidance. in these situations to consider whether the
revenue standard could be applied to a portfolio
of contracts or performance obligations.

3 PSAK 72 – Revenue from Contracts with Customers

The five-step approach b. the contract is terminated and amounts
received are non-refundable.
Entities will follow a five-step approach to apply
the standard:
• Step 1: Identify the contract(s) with the Collectability
customer An entity will assess at the inception of the
• Step 2: Identify the separate performance contract whether it is probable it will collect the
obligations in the contract transaction price. This assessment determines
whether a contract exists for the purpose of
• Step 3: Determine the transaction price applying the revenue standard.
• Step 4: Allocate the transaction price to The collectability assessment is based on
separate performance obligations the customer’s ability and intent to pay as
• Step 5: Recognise revenue when (or as) each amounts become due, after considering
performance obligation is satisfied any price concessions the entity expects to
provide. An entity will consider credit risk, but
not other uncertainties, such as those related
Step 1: Identify the contract(s) to performance or measurement, as these are
accounted for separately as part of determining
with the customer the measurement and timing of revenue.
A contract is an agreement between parties
Credit losses arising from a contract whose
that creates enforceable rights and obligations.
collection was probable at inception will be
It can be written, oral, or implied by an entity’s
recognised as an expense in the income
customary business practice. Generally, any
statement. This expense will be measured in
agreement that creates enforceable rights and
accordance with the relevant financial instrument
obligations will meet the definition of a contract.
standards. An entity will only reassess whether
An entity will apply the revenue standard to each
it is probable it will receive payment (and thus,
contract with a customer when all of the following
whether a contract exists for the purpose of
criteria are met:
applying the revenue guidance) if there is an
a. The parties have approved the contract and indication of a significant change in facts and
intend to perform their respective obligations. circumstances, such as a significant deterioration
in a customer’s ability to pay for the remaining
b. Each party’s rights regarding the goods or goods and services.
services to be transferred can be identified.
c. The payment terms can be identified.
PwC observation. In most cases, an
d. The risk, timing, or amount of the entity’s
entity will not enter into a contract with a
future cash flows are expected to change
customer when there is significant credit
(that is, the contract has commercial
substance). risk without also having adequate economic
protection. Judgement is required to
e. It is probable that the entity will collect the determine the accounting when there is a
consideration to which it will be entitled in significant deterioration in a customer’s
exchange for goods or services transferred. ability to pay after the inception of an
An entity will reassess whether the criteria are arrangement. Management will have to
met each reporting period to determine if the assess whether the deterioration relates
criteria are subsequently met if they are not met to performance obligations previously
at contract inception. An entity that receives satisfied, performance obligations to be
consideration from the customer when the criteria performed in the future, or both.
are not met will not recognise revenue until either:
a. the entity has no remaining performance
obligations and substantially all the
consideration is received and non-refundable,
or

PSAK 72 – Revenue from Contracts with Customers 4

Contract combination accounts for the modification as a termination
of the original contract and the inception of a
Contracts will be combined and accounted for as
new contract for all performance obligations that
a single contract only if they are entered into at or
remain unperformed.
near the same time, with the same customer (or
related parties), and one or more of the following An entity will account for a modification through
criteria are met: a cumulative catch-up adjustment if the goods
or services in the modification are not distinct
a. The contracts achieve a single commercial
from those in the original contract and are thus
objective and are negotiated as a package.
part of a single performance obligation that is
b. The price or performance of one contract only partially satisfied. The measure of progress
influences the amount of consideration to be towards satisfying the performance obligation is
paid in the other contract. updated to reflect performance completed and
performance that remains.
c. The goods or services in the separate
contracts represent a single performance A change to only the transaction price will be
obligation. treated like any other contract modification.
The change in price will be either accounted
for prospectively or on a cumulative catch-up
Contract modifications basis, depending on whether the remaining
performance obligations are distinct.
A contract modification occurs when the
parties approve a change that either creates
new or changes existing enforceable rights and
PwC observation. Accounting guidance for
obligations. Approval can be in writing, oral,
contract modifications did not previously
or implied by customary business practice.
exist for most industries and arrangements.
Management will need to determine when
a modification, such as a claim or unpriced The new guidance therefore provides
change order, is approved and therefore creates structure in an area where practice was
enforceable rights and obligations. An entity will previously mixed. Management will need to
not account for a modification until it is approved; apply judgement when evaluating whether
that is, it will continue to apply the revenue goods or services in a modification are
standard to the existing contract. distinct, and whether the price reflects the
stand-alone selling price to determine the
A contract modification is treated as a separate accounting. This might be more challenging
contract if the modification adds one or more in situations where there are multiple
distinct performance obligations to the contract
performance obligations in a contract, or
and the price increases by an amount that
when modifications occur frequently.
reflects the stand-alone selling price of the
additional distinct performance obligation(s).
Otherwise, a modification is accounted for as
an adjustment to the original contract, either Step 2: Identify the separate
prospectively or through a cumulative catch-up performance obligations in the
adjustment depending on whether the remaining contract
goods or services in the contract are distinct.
A performance obligation is a promise to transfer
An entity will account for a modification a distinct good or service (or a series of distinct
prospectively if the goods or services in the goods or services that are substantially the
modification are distinct from those transferred same and have the same pattern of transfer) to
before the modification. The remaining a customer. The promise can be explicit, implicit,
consideration in the original contract not or implied by an entity’s customary business
yet recognised as revenue is combined with practice. The objective of identifying distinct
the additional consideration promised in performance obligations is to depict the transfer
the modification to create a new transaction of goods or services to the customer. Identifying
price that is then allocated to all remaining performance obligations is more challenging
performance obligations (that is, both those not when there are multiple explicit or implicit
yet completed in the original contract and those promises in a contract.
added through the modification). This effectively

5 PSAK 72 – Revenue from Contracts with Customers

Explicit and implicit promises in a contract to PwC observation. The revenue standard
provide goods or services, including promises provides indicators rather than criteria to
to provide goods or services that a customer determine when a good or service is distinct
can resell or provide to its customer (an ‘end within the context of the contract. This
customer’), are performance obligations, even if allows management to apply judgement
they are satisfied by another party. to determine the separate performance
Management will need to determine whether obligations that best reflect the economic
promises are distinct when there are multiple substance of a transaction. All promises
promises in a contract. This is important because in an arrangement should be identified.
distinct performance obligations are the units of Promises that are inconsequential or
account that determine when and how revenue is perfunctory need to be identified, even
recognised. if they are not the ‘main’ deliverable in
the arrangement, because all promises
A good or service is distinct only if:
in a contract are goods or services that
• the customer can benefit from the good or a customer expects to receive. An entity
service either on its own or together with should assess whether inconsequential or
other readily available resources (that is, perfunctory performance obligations are
the goods or services are capable of being immaterial to the financial statements.
distinct); and
• the good or service is separately identifiable
from other promises in the contract (that Goods or services that are not distinct should be
is, the good or service is distinct within the combined with other goods or services until the
context of the contract). entity identifies a bundle of goods or services
that is distinct.
A customer can benefit from a good or service
on its own if it can be used, consumed, or sold to
generate economic benefits. A good or service Step 3: Determine the transaction
that cannot be used on its own, but can be used
with readily available resources, is still distinct,
price
as the entity has the ability to benefit from it. A The transaction price is the amount of
readily available resource is one that is sold consideration that an entity expects to be entitled
by the entity, by others in the market, or that a to in exchange for transferring promised goods
customer has already obtained from the entity. or services to a customer, excluding amounts
collected on behalf of a third party (for example,
Determining whether a good or service is distinct
some sales taxes). Determining the transaction
within the context of the contract requires
price is more complex if the arrangement involves
assessment of the contract terms and the intent
a variable consideration, a significant financing
of the parties. Indicators include, but are not
component, a non-cash consideration, or a
limited to:
consideration payable to a customer.
• The entity does not provide a significant
Variable consideration and the constraint on
service of integrating the individual goods
revenue recognition
or services in the contract into a bundle
that is the combined item the customer has The transaction price might include an element
contracted to receive. of consideration that is variable or contingent on
the outcome of future events, including (but not
• The good or service does not customise or
limited to) discounts, refunds, rebates, credits,
significantly modify another contractually
incentives, performance bonuses, and royalties.
promised good or service.
A consideration can also vary if an entity’s ability
• The good or service is not highly dependent to retain a fixed amount of the consideration
on or highly interrelated with other goods is contingent upon a future event. An entity’s
or services in the contract; therefore, a practices, policies, or statements might also
customer’s decision to not purchase a good result in a variable consideration, for example,
or service does not significantly affect the if they indicate the entity will provide price
other promised goods or services in the concessions.
contract.

PSAK 72 – Revenue from Contracts with Customers 6

Variable considerations should be estimated using be entitled to all of the consideration even after the
the more predicative of the following approaches: performance obligation is satisfied. One example is
the expected value or the most likely amount. The an entity that enters into a contract with a customer
expected-value approach represents the sum of to provide legal services in return for a fixed fee,
probability-weighted amounts for various possible but the entity will only be paid if the court rules
outcomes. The most likely amount represents in favour of the customer. The entity might not
the most likely amount in a range of possible be able to recognise revenue until the court rules
amounts. The approach used is not a policy on the case, even though the legal services have
choice: management should use the approach been provided. However, if management considers
that it expects will best predict the amount of it highly probable that the fee is not subject to
consideration to which the entity will be entitled significant reversal of cumulative revenue, the entity
based on the terms of the contract and taking into will recognise revenue prior to the court’s ruling.
account all reasonably available information. The
Performance-based incentive fees (for example,
approach used should also be applied consistently
fees that vary based on the achievement of a
throughout the contract.
contract milestone or an investment portfolio’s
A variable consideration included in the transaction performance) are also variable considerations and
price is subject to a constraint. An entity should therefore subject to the constraint.
recognise revenue as performance obligations are
satisfied only if it is highly probable that a change
in the estimate of the variable consideration would PwC observation. The reach of the variable-
not result in a significant reversal of the cumulative consideration guidance introduced in the
revenue recognised. This assessment will often revenue standard is broad and includes
require judgement. amounts that historically might not have
The following indicators suggest that including been viewed as variable consideration. For
an estimate of a variable consideration in the example, fixed amounts that an entity is
transaction price could result in a significant entitled to only upon the achievement of
reversal of cumulative revenue: certain events are variable considerations
under the revenue standard and included in
• The amount of the consideration is highly the transaction price subject to the constraint.
susceptible to factors outside the entity’s
Management will need to think broadly about
influence.
amounts, whether fixed or variable, that will
• Resolution of the uncertainty about the amount be accounted for as variable considerations.
of the consideration is not expected for a long
period of time. The evaluation of variable considerations will
require judgement in many cases. Entities
• The entity has limited experience with similar that defer revenue recognition under current
types of contracts. guidance because the price is not reliably
• The entity has a practice of offering a broad measurable could be significantly affected
range of price concessions or changing by the new standard. An example is a
payment terms and conditions in similar situation where the price is fixed, but the
circumstances for similar contracts. entity has a history of granting concessions.
Entities could be required to recognise some
• There is a large number and broad range of
minimum amount of revenue when control
possible outcomes.
transfers as opposed to waiting until the
Management will need to determine if there is a extent of price concessions is resolved. This
portion of the variable consideration (that is, some is because it is unlikely that an entity would
minimum amount) that should be included in be willing to grant a concession for 100% of
the transaction price, even if the entire estimate the price.
of variable consideration is not included due to
the constraint. Management’s estimate of the New processes might be needed for making
transaction price will be reassessed each reporting and monitoring estimates of variable
period, including any estimated minimum variable considerations on an ongoing basis.
consideration. Concurrent documentation of the judgements
considered in making estimates will also be
The constraint also applies to contracts with a
important.
fixed price if it is uncertain whether the entity will

7 PSAK 72 – Revenue from Contracts with Customers

The standard includes a narrow exception to the Significant financing component
constraint on variable considerations for sales- or
The transaction price should be adjusted for
usage-based royalties on licences of intellectual
any significant financing component in the
property (IP). Royalties from licences of IP are
arrangement. A practical expedient allows
not included in the transaction price until they are
entities to disregard the time value of money
no longer variable (that is, when the customer’s
if the period between transfer of the goods or
subsequent sales or usage occur). The exception
services and payment is less than one year,
is limited to sales- or usage-based licences of IP
even if the contract itself is for more than one
and will not apply to other royalty arrangements,
year. In assessing whether a contract contains a
and should not be applied by analogy.
significant financing component, an entity should
consider various factors, including:
PwC observation. Management will need • the length of time between when the entity
to apply judgement to determine whether transfers the goods or services to the
an arrangement qualifies for the exception customer and when the customer pays for
to the overall variable-consideration them;
constraint, given that neither ‘intellectual • whether the amount of consideration would
property’ nor ‘royalty’ are defined in IFAS. substantially differ if the customer paid cash
The boundaries for determining when the when the goods or services were transferred;
sales- and usage-based exception applies and
might be an area of the new standard that is
• the interest rate in the contract and prevailing
subject to further clarification.
interest rates in the relevant market.
An outright sale of IP, for example, does
An entity that is paid in advance for goods or
not appear to qualify for the exception. It is
services need not reflect the effects of the time
unclear whether a perpetual licence, which value of money when the timing of transfer of
is typically viewed as an in-substance sale, those goods or services is at the customer’s
will qualify for the exception. The exception discretion. For example, if a customer purchases
also does not appear to apply if the licence a prepaid phone card from a telecom entity and
is not distinct from other promised goods uses the prepaid airtime at its discretion, the time
or services in an arrangement. Even if the value of money need not be considered. Another
licence is distinct, it appears that the entity example is a customer-loyalty program where
will need to conclude that the contingent the customer can redeem the points awarded by
consideration (that is, the sales- or usage- the entity at its discretion. Those entities will not
based royalty) relates specifically to the be required to account for time value of money
licence and not to other performance even though there could be a significant timing
obligations in the arrangement for the difference between payment and performance.
exception to apply. There are two additional situations in which a
Certain fixed payments might be in- significant financing component is not present.
substance sales-based royalties and The first is when a substantial amount of the
therefore subject to the exception. An promised consideration is variable and the
example is an arrangement that requires amount, or amount and timing, of payment varies
a licensee to make a fixed payment that is due to factors outside the control of the entity
subject to ‘claw back’ if the licensee does or customer (for example, a sales-based royalty).
not meet certain sales or usage targets. The other is when the difference between the
contractual consideration and the cash selling
price arises for reasons other than the granting of
finance to the entity or the customer (for example,
protection against non-performance). The second
situation allows entities to consider the intent of
the parties when assessing whether a significant
financing component is present.

PSAK 72 – Revenue from Contracts with Customers 8

The amount of revenue recognised will be the customer pays upfront and can renew
different from the amount of cash received from for C200 annually after the initial three-year
the customer when an arrangement contains period. The entity will need to consider
a significant financing component. Revenue whether there is a significant financing
recognised will be less than cash received when component because the customer paid
payments are made after performance, because C600 in advance, but there is no discount
the entity is providing the customer with financing. for paying upfront as compared to the
A portion of the consideration will be recognised annual pricing (C200 per year). If the
as interest income. Revenue recognised will advance payment is required for reasons
exceed the cash received for payments made other than obtaining financing, such as for
in advance of performance, because the entity business purposes to obtain a longer-term
receives financing from the customer. The entity
contract, then the entity would conclude
will recognise interest expense on the financing
that a significant financing obligation does
related to advance payments.
not exist.
An entity needs to determine the discount rate
to use when calculating the interest element of An entity with contracts that include a
a significant financing component. The entity significant financing component should
should use a discount rate that reflects what it consider any operational challenges relating
would charge in a separate financing transaction to measuring and tracking the interest
with the customer, including consideration of element of the arrangement. This could
any collateral or guarantees it would require. An require additional information technology
entity receiving a significant financing benefit systems, processes, or internal controls to
(for example, because it received an advance capture and measure such information.
payment) should consider its incremental
borrowing rate to determine the interest rate. The
discount rate is not reassessed after inception of
the contract.
Non-cash consideration
An entity will measure any non-cash
PwC observation. Management will need to consideration exchanged in the transaction
evaluate arrangements with customers to (including equity of the customer) at its fair value
determine whether they include a significant to determine the transaction price. An entity will
financing component. The guidance related measure the consideration indirectly by reference
to a significant financing component is to the stand-alone selling price of the goods or
different than current guidance related to services promised in the arrangement if it cannot
applying the time value of money. reasonably estimate the fair value of the non-
cash consideration.
In some cases it will be clear that a
significant financing component exists An entity could have a customer that contributes
goods or services (for example, materials or
due to the terms of the arrangement. In
labour) to facilitate the fulfilment of a contract.
other cases it could be challenging to
The entity will need to assess whether it obtains
determine whether a significant financing
control of those contributed goods or services
component exists, especially in some to determine whether they are non-cash
long-term arrangements with multiple consideration and therefore revenue to the entity.
performance obligations if goods or
services are delivered and cash payments
received throughout the arrangement. The Consideration payable to a customer
standard allows for some level of judgement
by requiring entities to assess whether the A consideration paid (or expected to be paid) to
substance of the payment arrangement is a a customer or to a customer’s customer reduces
financing. the transaction price unless the payment is made
in exchange for a distinct good or service that the
For example, a software entity agrees customer transfers to the entity. The definition of
to provide three years of post-contract ‘distinct’ is consistent with the guidance in step
customer support (PCS) for C600, which 2 for identifying performance obligations (see

9 PSAK 72 – Revenue from Contracts with Customers

page 6). An entity will recognise the reduction of PwC observation. The revenue standard
revenue in the later of: requires entities to allocate the transaction
price to each separate performance
• the period the entity recognises revenue
for the transfer of the promised goods or obligation. Under current guidance, entities
services; or generally allocate the consideration to
individual components or deliverables in an
• the period the entity pays or promises to arrangement.
pay the consideration (even if the payment is
conditional on a future event).
A consideration paid or payable to a customer Residual approach
(or to other parties that purchase the entity’s
goods or services from the customer) includes A residual approach can only be used to
cash, credits, or other items that can be applied calculate the stand-alone selling price of a
to amounts owed to the entity. For example, a distinct good or service if the selling price is
coupon or voucher that an end customer can highly variable or uncertain. It can be applied
redeem to reduce the purchase price of the regardless of whether that good or service is
entity’s goods sold through a distributor is a delivered at the beginning or at the end of the
consideration payable to a customer. contract.

A consideration that is a payment for a distinct A selling price is highly variable when an entity
good or service is accounted for consistently sells the same good or service to different
with how an entity accounts for other purchases customers (at or near the same time) for a broad
from suppliers. If a consideration paid for distinct range of amounts. A selling price is uncertain
goods or services is above the fair value of those when an entity has not yet established a price
goods or services, any excess is recorded as a for a good or service and it has not been sold
reduction of the transaction price. previously.
The residual approach requires that an entity
first determine if any discounts need to be
Step 4: Allocate the transaction allocated to specific performance obligations
price to separate performance in accordance with the guidance in the next
obligations paragraph (‘allocating discounts and variable
consideration’) prior to using the residual
The transaction price is allocated to the separate approach to determine the stand-alone selling
performance obligations in a contract based price of the remaining item(s). If the discount is
on the relative stand-alone selling prices of the not allocated to specific performance obligations,
goods or services promised. This allocation is management will allocate the discount
made at contract inception and not adjusted to proportionately to all performance obligations in
reflect subsequent changes in the stand-alone the contract. When a residual approach is used,
selling prices of those goods or services. judgement will be needed to determine if the
The best evidence of stand-alone selling price is amount allocated to the item faithfully depicts
the observable price of a good or service when the amount of consideration to which the entity
the entity sells that good or service separately. expects to be entitled. The residual approach
Management will need to estimate the selling cannot be used, for example, if it results in a very
price of goods or services that do not have low amount or no consideration allocated to an
an observable stand-alone selling price, and item.
should maximise the use of observable inputs
when making that estimate. Possible estimation
methods include, but are not limited to:
• expected cost plus an appropriate margin;
• assessment of market prices for similar
goods or services adjusted for entity-specific
costs and margins; and
• residual approach, in limited circumstances.

PSAK 72 – Revenue from Contracts with Customers 10

 PwC observation. The residual approach PwC observation. An arrangement will
is different from the residual method need to include at least three performance
that is used by some entities today (for obligations to apply this guidance,
example, software companies). Applying as the entity will need to sell at least
today’s residual method results in the entire two performance obligations together
discount in an arrangement being allocated regularly to evidence that a subset of the
to the first item delivered under the contract. arrangement is separately sold at the
This will not be the case under the new discount. The revenue standard includes
guidance because discounts will typically be multiple examples to illustrate how an
allocated proportionately to all items. entity will allocate discounts and variable
consideration.
Use of the residual approach should be
limited and it will be used less frequently
than the residual method is used today. An
entity that applies the residual method today Changes in the estimate of a variable
should not presume it will be able to use a consideration should be allocated entirely to a
residual approach to estimate selling price performance obligation, or to a distinct good or
under the new standard, and should not service that forms part of a single performance
expect the residual method and the residual obligation, if both of the following criteria are met:
approach to have identical results. • The variable payment relates to a specific
performance obligation or outcome from
satisfying that performance obligation.
Allocating discounts and variable
consideration • Allocating the variable amount of the
consideration entirely to the separate
Discounts and variable considerations will performance obligation is consistent with
typically be allocated proportionately to all of the amount of consideration that the entity
the performance obligations in the contract. If expects to be entitled to for satisfying that
certain conditions are met, a discount or variable performance obligation after considering all
consideration can be allocated to one or more other performance obligations and payment
separate performance obligations, rather than to terms in the contract.
all performance obligations in the arrangement.
An entity should allocate a discount entirely to
one or more performance obligation(s) if all of the Step 5: Recognise revenue
following criteria are met: when (or as) each performance
• The entity regularly sells each distinct good obligation is satisfied
or service (or each bundle of distinct goods or The final step in the model is recognising revenue.
services) on a stand-alone basis. An entity will recognise revenue when (or as) a
good or service is transferred to the customer
• The entity regularly sells, on a stand-alone
and the customer obtains control of that good
basis, a bundle of some of those goods or
or service. Control of an asset refers to an
services at a discount to the stand-alone
entity’s ability to direct the use of and obtain
selling prices of the goods or services in that
substantially all of the remaining benefits (that is,
bundle.
the potential cash inflows or savings in outflows)
• The discount attributable to the bundle of from the asset. Directing use of an asset refers to
goods or services is substantially the same as a customer’s right to deploy that asset, to allow
the discount in the contract. another entity to deploy that asset in its activities,
or to restrict another entity from deploying that
asset.

11 PSAK 72 – Revenue from Contracts with Customers

 PwC observation. The standard requires transferring a remaining performance obligation to
management to determine when control another entity are not considered in this evaluation.
of a good or service has transferred to the The second criterion addresses transactions
customer. The timing of revenue recognition where an asset is created or enhanced and the
could change for some transactions customer controls that asset as it is created. This
compared to current guidance, which is applies in situations where the customer controls
more focused on the transfer of risks and the work-in-progress as the entity manufactures
rewards. The transfer of risks and rewards goods. For example, it is common in transactions
is an indicator of whether control has with a government that the government entity (the
transferred, but additional indicators will customer) controls any work-in-progress or other
also need to be considered. For example, output of the contract. Management should apply
an entity that transfers control of a good the guidance on transfer of control to determine
to a customer but retains some economic whether the customer obtains control of the asset
risks might need to record revenue when as it is created.
the good transfers, while under existing The last criterion addresses situations where the
guidance revenue recognition might be customer does not control an asset as it is created,
delayed until all of the economic risks have or no asset is created by the entity’s performance.
also transferred. Management will need to consider whether the
asset being created has an alternative use to the
entity (if an asset is created) and whether the
An entity should determine at contract inception entity has an enforceable right to payment for
whether control of a good or service is transferred performance to date.
over time or at a point in time. This determination
should depict the transfer of benefits to the The assessment of whether an asset has an
customer and should be evaluated from the alternative use should be made at contract
customer’s perspective. An entity should first inception, and not reassessed. Management
assess whether the performance obligation is should consider its ability to redirect a product
satisfied over time. If not, the good or service that is partially completed to another customer,
transfers at a point in time. considering both contractual and practical
limitations. A substantive contractual restriction
Performance obligations satisfied over time that limits management’s ability to redirect the
An entity will recognise revenue over time if any of asset could indicate the asset has no alternative
the following criteria are met: use. Practical limitations, such as significant costs
required to rework the asset so it could be directed
• The customer concurrently receives and to another customer, could also indicate that the
consumes the benefits provided by the asset has no alternative use.
entity’s performance as the entity performs.
A right to payment exists if an entity is entitled to
• The entity’s performance creates or enhances payment for performance completed to date if the
a customer-controlled asset. customer terminates the contract for reasons other
• The entity’s performance does not create an than the entity’s non-performance. A specified
asset with an alternative use and the entity payment schedule does not, by itself, indicate the
has a right to payment for performance entity has a right to payment for performance to
date. The assessment of the enforceability of the
completed to date.
right to payment should include consideration of
The first criterion generally addresses service the contract terms and any legal precedent that
contracts where no asset is created and the could override the contract terms.
customer consumes the services as they are
The right to payment should compensate the entity
provided. The performance obligation is satisfied
at an amount that reflects the selling price of the
over time if another entity would not have to
goods or services provided to date, rather than
substantially re-perform the work completed
provide compensation for only costs incurred to
to date to fulfil the remaining obligation to the
date or the entity’s potential loss of profit if the
customer. For example, a contract with a customer
contract is terminated. This would be an amount
to provide daily cleaning services of an office
that covers an entity’s cost plus a reasonable profit
building would meet this criterion. Contractual or
margin for work completed.
practical limitations that prevent an entity from

PSAK 72 – Revenue from Contracts with Customers 12

 PwC observation. Management will need • The entity has transferred legal title to the
to apply judgement to assess the criteria asset.
for performance obligations satisfied • The entity has transferred physical
over time, especially when assessing possession of the asset.
whether assets have an alternative use and
whether the entity has a right to payment • The entity has transferred the significant risk
for performance completed to date. For and rewards of ownership to the customer.
example, management will need to assess • The customer has accepted the asset.
whether there is a substantive reason for
restrictions on transfer of the asset(s) to
another party in a contract to determine PwC observation. All of the indicators above
whether assets have an alternative use. do not need to be satisfied for revenue to be
Manufacturers of large volumes of recognised at a point in time. The standard
homogeneous goods produced to a does not place more weight on one indicator
customer’s specification might be surprised over another. An entity will need to consider
to find that they could meet the criteria all indicators, not just whether significant
for performance obligations satisfied risk and rewards have transferred, to
over time. This is because (1) such goods determine when revenue should be
often have no alternative use to the entity recognised.
given their customisation or contractual
restrictions, and (2) the payment terms
in these arrangements might include a Measuring progress toward satisfying a
protective clause that provides for payment performance obligation
for performance to date in the event the
For a performance obligation satisfied over
contract is cancelled.
time, the objective is to recognise revenue in a
Entities that manufacture these types of manner that depicts the transfer of control of the
goods could be required to recognise promised goods or services to the customer.
revenue as the goods are produced, Methods for measuring progress include:
rather than when they are delivered to the • output methods, such as units produced or
costumer. Differences in payment terms delivered, contract milestones, or surveys of
could result in the goods being treated as a work performed; and
performance obligation satisfied over time
in one case and as inventory transferred • input methods, such as costs incurred, labour
at a point in time in another. The ‘right to hours expended, time elapsed, or machine
hours used.
payment‘ criterion might not be satisfied if
the customer only provides reimbursement Entities using an input method to measure
for the cost of units in production. progress should exclude the effects of inputs
that do not depict the transfer of control to
the customer. An entity sometimes receives
Performance obligations satisfied at a point in materials that a customer controls prior to
time when those materials are used in the good
or service the entity is providing (uninstalled
An entity will recognise revenue at a point in materials). An entity might also incur costs that
time (when control transfers) for performance are attributable to significant inefficiencies in the
obligations that do not meet the criteria for entity’s performance that were not considered in
recognition of revenue over time. determining the contract price. These situations
To determine when a customer obtains control can create challenges if an entity is using an
and an entity satisfies a performance obligation, input method to measure progress. The measure
the entity should consider the definition of transfer of progress should be adjusted to ensure
of control on pages 11-12 and the following that it depicts the entity’s performance. The
indicators: standard includes an example that illustrates
how management will recognise revenue when
• The entity has a present right to payment for significant materials are delivered prior to
the asset. installation.

13 PSAK 72 – Revenue from Contracts with Customers

Revenue should only be recognised for a Distinct licences that meet all of the following
performance obligation satisfied over time if the three criteria provide access to IP (and, thus,
entity can reasonably measure its progress toward revenue is recognised over time):
complete satisfaction. An entity must have reliable
• The licensor will undertake (either
information that can be applied to an appropriate contractually or based on customary
method of measuring progress to meet this business practices) activities that significantly
objective. An entity that cannot reasonably affect the IP to which the customer has rights.
measure the outcome of a performance obligation,
but expects to recover the costs incurred, should • The licensor’s activities do not otherwise
recognise revenue only to the extent of the costs transfer a good or service to the customer as
until a reliable measure of progress can be made. they occur.
• The rights granted by the licence directly
Other considerations expose the customer to any effects (both
positive and negative) of those activities on
Several issues exist beyond applying the five the IP and the customer entered into the
steps of the model. The revenue standard contract with the intent of being exposed to
provides guidance in the following areas to assist those effects.
entities in applying the model.
The first criterion requires an assessment of
Licences whether a licensor might undertake activities
that significantly affect the IP. These activities
A licence establishes a customer’s rights related might result from published policies or customary
to an entity’s IP and the entity’s obligations related practices, or they might be the result of the
to those rights. Licences of IP include, among existence of a shared economic interest between
others: software and technology rights; media the licensor and customer.
and entertainment rights; franchises; patents;
trademarks; and copyrights. Licences can vary The second criterion requires that the activities
significantly and include different features and that might affect the IP are not additional
economic characteristics, which can lead to performance obligations in the contract. Activities
significant differences in the rights provided. are not performance obligations if they do not
directly transfer goods or services to a customer.
An entity should first consider the guidance for A customer might be affected by the activities
distinct performance obligations to determine if a because they affect the IP; however, this effect
licence is distinct from other goods or services in could be either positive or negative.
an arrangement. An entity will combine licences
that are not distinct with other goods and services The third criterion requires that the effects
in the contract and recognise revenue when it (positive or negative) of any activities identified in
satisfies the combined performance obligation. the first criterion impact the customer. Activities
Examples of licences that are not distinct include that do not affect what the licence provides to the
a licence that is integral to the functionality of a customer or what the customer controls do not
tangible good (such as software included on a meet this criterion.
hardware device) or a licence that the customer
can benefit from only in conjunction with a related
service (such as access to online internet content). PwC observation. The revenue standard
includes a number of examples that
The nature of the rights provided in some licence illustrate how an entity should apply the
arrangements is to allow access to the entity’s criteria to different licence arrangements.
IP as it exists throughout the licence period. Applying these criteria could be challenging
Licences that provide access are performance and will require judgement, especially to
obligations satisfied over time and, therefore, determine what constitutes an activity rather
revenue is recognised over time. The nature of the than a separate performance obligation.
rights in other transactions is to provide a right Different accounting conclusions might be
to use the entity’s IP as it exists at the point in reached for arrangements that appear to
time the licence is granted. Licences that provide be similar, which could make comparability
a right to use an entity’s IP are performance across entities and industries more
obligations satisfied at a point in time, with challenging.
revenue recognised when control transfers to the
licensee and the licence period begins.

PSAK 72 – Revenue from Contracts with Customers 14

Contract costs customer because the customer is limited in its
ability to direct the use of and obtain substantially
An entity should recognise an asset for the
all of the remaining benefit from the asset. An
incremental costs to obtain a contract if
entity will account for the contract as a lease if
management expects to recover those costs.
the entity can or must repurchase the asset for
Incremental costs of obtaining a contract are
a price that is less than the original selling price,
costs the entity would not have incurred if the
unless the contract is part of a sale-leaseback
contract had not been obtained (for example,
transaction. An entity will account for a contract
sales commissions). Costs that the entity would
as financing if it can or must repurchase the asset
have incurred if the contract had not been
for a price that is equal to or greater than the
obtained, such as facilities costs and sales force
original selling price of the asset. When comparing
salaries, are not capitalised. An entity can elect
the repurchase price to the selling price an entity
to expense the cost of obtaining a contract if the
should consider the time value of money.
amortisation period would be one year or less.
An arrangement where a customer has the right
An entity will recognise an asset for costs to fulfil a
to require the entity to repurchase an asset (a put
contract if those costs:
option) at a repurchase price less than the original
• relate directly to a contract or anticipated selling price will be accounted for as a lease if the
contract that the entity can specifically arrangement provides the customer a significant
identify; economic incentive to exercise that right,
• generate or enhance the entity’s resources unless the contract is part of a sale-leaseback
that will be used to satisfy future performance transaction. The arrangement is a financing if
obligations; and the repurchase price of the asset is equal to or
exceeds the original selling price and is more than
• are expected to be recovered. the expected market value of the asset.
Management will need to consider whether costs An arrangement is a sale of a product with a right
to fulfil a contract should be accounted for in of return, as discussed in paragraph 91, if the
accordance with other standards (for example, customer has a repurchase right at an amount
inventory, fixed assets, or intangible assets) before less than the original selling price (or greater than
applying the revenue standard. Costs that relate or equal to the original selling price but less than
to satisfied performance obligations are expensed the expected market value), but does not have
as incurred. a significant economic incentive to exercise that
right.
PwC observation. The guidance on contract
costs is expected to result in the recognition Principal versus agent
of more assets than under current practice.
Entities that expense sales commissions Entities often involve third parties when
as paid and set¬up costs as incurred could providing goods and services to their customers.
now be required to capitalise and amortise Management needs to assess, for each
these costs if they are recoverable. performance obligation in a contract, whether
the entity is acting as the principal or as an agent
in such arrangements. An entity recognises
revenue on a gross basis if it is the principal in the
An asset recognised for the costs to obtain or fulfil arrangement, and on a net basis (that is, equal to
a contract will be amortised on a systematic basis the fee or commission received) if it is acting as an
as the goods or services to which the assets relate agent.
are transferred to the customer. The asset will also
be assessed for impairment each reporting period. An entity is the principal in an arrangement if it
obtains control of the goods or services of another
party in advance of transferring control of those
Repurchase agreements goods or services to a customer. The entity is an
agent if its performance obligation is to arrange for
An entity that has an obligation or right to
another party to provide the goods or services. An
repurchase an asset (a forward or a call option)
entity will need to evaluate if and when it obtains
has not transferred control of the asset to the

15 PSAK 72 – Revenue from Contracts with Customers

control. If an entity obtains legal title to a product additional goods or services are transferred to the
only momentarily before the title is transferred to customer, or the option expires.
the customer, this does not necessarily indicate
An example of a material right is a discount that
that the entity is acting as the principal in the
is incremental to the range of discounts typically
arrangement.
given to a similar class of customers in the same
Indicators that the entity is an agent include: market. The customer is effectively paying in
advance for future goods or services and therefore
• Fulfilment - The entity does not have primary
revenue is recognised when those future goods or
responsibility for fulfilment of the contract.
services are transferred.
• Inventory risk - The entity does not have
inventory risk at any point during the Management will need to determine the stand-
transaction (that is, before the order, during alone selling price for the option. Often the option
shipment, or upon return). will not have a directly observable selling price;
therefore, management will need to estimate
• Pricing - The entity does not have discretion the stand-alone selling price. This estimate is
in establishing prices for the other party’s adjusted for any discount the customer would
good or service.
receive without exercising the option and the
• Credit risk - The entity does not have likelihood that the customer will exercise the
customer credit risk for the amount of the option. The revenue standard includes several
receivable. examples related to customer options as well as
• Commission - The entity’s consideration is in the treatment of unexercised rights.
the form of a commission.
PwC observation. The guidance related
PwC observation. The indicators in the to options that provide the customer with
revenue standard are similar to the current a material right could have a significant
standard. However, the specific requirement effect on entities in a number of industries.
for the entity to obtain control differs from For example, entities within the retail and
current guidance. The revenue standard consumer industry that provide customers
does not weigh any of the indicators more with a loyalty program will need to consider
heavily than others. New and evolving whether the rewards issued by the program
business models, especially related to provide a material right. A portion of the
internet transactions, have resulted in an transaction price will be allocated to the
increased focus in this area. We expect that reward if it is a material right and a distinct
entities will continue to apply judgement performance obligation.
to assess whether to recognise revenue
on a gross or net basis for many of these
transactions, similar to today. Rights of return
An entity will account for the sale of goods
with a right of return by recognising revenue
Options to acquire additional goods or for the consideration it expects to be entitled
services to (considering the products expected to be
returned) and a liability for the refund it expects to
Entities often grant customers the option to pay to customers, similar to current accounting
acquire additional goods or services free of charge under IFAS. Amounts are updated for changes
or at a discount. These options might include in expected returns each reporting period.
customer award credits or other sales incentives Exchanges by customers for products of the
and discounts, such as volume discounts. An same type, quality, condition, and price are not
option gives rise to a separate performance considered returns.
obligation if it provides a material right to the
customer that the customer would not receive The entity will recognise an asset and
without entering into the contract. The entity will corresponding adjustment to cost of sales for
recognise revenue allocated to an option when the the right to recover goods from customers. The

PSAK 72 – Revenue from Contracts with Customers 16

asset is initially measured at the original cost of Non-refundable upfront fees
the goods less any expected costs to recover
Some entities charge a customer a non-refundable
those goods. Impairment is assessed at each
fee at the beginning of an arrangement. Examples
reporting date. The entity should present the
include set-up fees, activation fees, and joining
asset separately from the refund liability (that is,
fees. Management needs to determine whether a
the entity should not present a net balance in
non-refundable upfront fee relates to the transfer
the financial statements). The revenue standard
of a promised good or service to a customer.
includes an example that illustrates the journal
entries that an entity would record to account for A non-refundable upfront fee might relate to an
estimated product returns. activity undertaken at or near contract inception.
Similar to current accounting under IFAS, the
activity does not result in the transfer of a
Warranties promised good or service to the customer unless
the entity has satisfied a separate performance
An entity accounts for a warranty as a separate
obligation. The upfront fee is recognised as
performance obligation if the customer has the
revenue when goods or services are provided
option to purchase the warranty separately. An
to the customer in the future. Depending on the
entity accounts for a warranty as a cost accrual if
nature of the fee, the period of revenue recognition
it is not sold separately, unless the warranty is to
could extend beyond the initial contractual period
provide the customer with a service in addition to
if the entity grants the customer the option to
assurance that the product complies with agreed-
renew the contract and that option provides the
upon specifications.
customer with a material right.
An entity should consider factors such as whether
the warranty is required by law, the length of
the warranty period, and the nature of the tasks Bill-and-hold arrangements
the entity has promised to perform as part of
In a bill-and-hold arrangement, an entity bills
the warranty to determine whether the warranty
a customer for a product but retains physical
provides the customer with an additional service.
possession of the product until a later date.
Judgement will be required in this assessment.
Revenue is recognised upon transfer of control of
The portion of a warranty that provides a service
the goods to the customer (that is, the customer
in addition to assurance that the product complies
has the ability to direct the use of and obtain
with specifications is accounted for as a separate
substantially all of the remaining benefits from the
performance obligation. An entity that cannot
asset). In addition to applying the control guidance
reasonably separate the obligation to provide an
in the standard, all of the following requirements
additional service from the rest of the warranty
must be met to recognise revenue in a bill-and-
should account for both together as a single
hold arrangement:
performance obligation providing a service.
• The reason for the customer requesting the
bill-and-hold arrangement is substantive.
PwC observation. The guidance on • The product is ready for physical transfer to
accounting for warranties is generally the customer and separately identified as the
consistent with the current standard. customer’s product.
However, it might be challenging to separate
a single warranty that provides both a • The entity cannot use the product or direct
standard warranty and an additional service the product to another customer.
in some arrangements. Management will An entity will need to consider whether it is
have to develop processes to estimate providing custodial services to the customer that
stand-alone selling prices and allocate the might be a separate performance obligation if the
transaction price between the performance bill-and-hold criteria are met. Custodial services
obligations in the arrangement when such that are a separate performance obligation will
services are not sold separately. result in a portion of the transaction price being
allocated to that service.

17 PSAK 72 – Revenue from Contracts with Customers

 PwC observation. The list of indicators Disclosures
for bill-and-hold transactions is generally
consistent with the current guidance under The revenue standard requires a number of
IFAS. disclosures intended to enable users of financial
statements to understand the nature, amount,
timing, and uncertainty of revenue and the related
cash flows. The disclosures include qualitative
Transfers of assets that are not an output of and quantitative information about contracts
an entity’s ordinary activities with customers, significant judgements made
The revenue standard also amends existing in applying the revenue guidance, and assets
requirements for gain or loss recognition on the recognised from the costs to obtain or fulfil a
transfer of certain non-financial assets that are contract.
not the output of an entity’s ordinary activities. The disclosures are required for each period a
Specifically, PSAK 16, Property, Plant and statement of comprehensive income is presented
Equipment, PSAK 19, Intangible Assets, and and as of each period a statement of financial
PSAK 13, Investment Property, were modified. position is presented. See the Appendix for a
Entities will apply the concepts related to control listing of these required disclosures.
and measurement to these arrangements. The
revenue standard will be applied to determine
when the asset should be de-recognised and PwC observation. The disclosure
determine the consideration to be included in the requirements are significantly greater than
net gain or loss recognised on transfer of these existing disclosure requirements for revenue
assets. under IFAS. The revenue standard could add
significant disclosures for interim financial
statements as well. This could require new
Consignment arrangements systems, processes, and internal controls
It is common in certain industries for entities to capture information that has historically
to transfer goods to dealers or distributors on not been needed for financial reporting
a consignment basis. The transferor typically purposes, particularly in interim financial
owns the inventory until a specified event statements. The standard includes several
occurs, such as the sale of the product to an end examples that illustrate specific aspects
customer. Revenue should not be recognised in a of the disclosure requirements. However,
consignment arrangement until the transferor no entities will need to tailor the sample
longer controls the asset. disclosures for their specific facts and
circumstances.
Management should consider the following
common characteristics to determine if an
arrangement is a consignment arrangement:
• The entity holding the goods does not have
an unconditional obligation to pay for the
goods.
• The entity can require return of the product
or transfer to another distributor (which
indicates that control has not transferred to
the distributor).
• The goods are controlled by the entity until a
specified event occurs.

PSAK 72 – Revenue from Contracts with Customers 18

What’s next

Entities will apply the revenue standard in the first Entities are also required to disclose the amount
interim period within annual reporting periods by which each financial statement line item is
beginning on or after 1 January 2020. affected by the adoption in the year of initial
application.
An entity can apply the revenue standard
retrospectively to each prior reporting period
presented (full retrospective method) or
PwC observation. The simplified transition
retrospectively with the cumulative effect of
initially applying the standard recognised at the method is intended to reduce the transition
date of initial application in retained earnings time and effort for preparers that choose
(simplified transition method). this option. The requirement for entities
to disclose the impact to each financial
An entity that elects to apply the standard using statement line item will effectively result
the full retrospective method can apply certain in an entity applying both the new revenue
practical expedients: standard and the previous revenue
• For completed contracts, an entity need not guidance in the year of initial application.
restate contracts that begin and end within The boards provided a longer than typical
the same annual reporting period.
period of time for transition because of
• For completed contracts that have variable the pervasiveness of the standard and
consideration, an entity can use hindsight the importance of reporting revenue. It is
and use the transaction price at the date the intended to ensure that there is sufficient
contract was completed. time for entities that want to use the full
• For all reporting periods presented before retrospective method as well as for those
the date of initial application (for example, that use the simplified transition method,
1 January 2020 for an entity with a 31 given the concerns of preparers about the
December year-end), an entity is not required amount of effort adopting the standard
to disclose the amount of transaction price might require. Full retrospective application
allocated to the remaining performance provides stronger trend information that
obligations and an explanation of when the some entities might prefer to provide to
entity expects to recognise that amount as investors, so it was important to provide
revenue. sufficient time for these preparers to
An entity that elects to use the simplified transition.
transition method must disclose this fact in its
financial statements. An entity applying this
method may also use the practical expedient
either (a) for all contract modifications that
occur before the beginning of the earliest period
presented, or (b) for all contract modifications
that occur before the date of initial application.
An entity using this method can elect to apply
the revenue standard only to contracts that
are not completed (that is, the entity has not
transferred all of the goods or services promised
in the contract) as of the date of initial application.

19 PSAK 72 – Revenue from Contracts with Customers

Appendix: Disclosure
requirements

Disclosure type Disclosure requirement

Disaggregation of Disclose disaggregated revenue information in categories (such as type of

revenue good or service, geography, market, type of contract, etc.) that depict how
the nature, amount, timing, and uncertainty of revenue and cash flows are
affected by economic factors. Provide sufficient disclosure to enable a user
to understand the relationship between the disaggregated information and
the revenue information disclosed for each reportable segment (PSAK 5).
Reconciliation of • Disclose opening and closing balances of contract assets and liabilities
contract balances and provide a qualitative and quantitative description of significant
changes in these amounts.
• Disclose the amount of revenue recognised that was included in the
contract liability balance at the beginning of the period.
• Disclose the amount of revenue recognised in the current period
relating to performance obligations satisfied in a prior period (such as
from contracts with variable consideration).
• Disclose how the timing of the satisfaction of a performance obligation
relates to the timing of payment. Discuss the effect on the contract
asset and liability balances related to any timing difference.
Performance Disclose information about performance obligations, including:
obligations • When performance obligations are typically satisfied.
• Significant payment terms.
• Nature of the goods or services promised to be transferred.
• Obligations for returns, refunds, or other similar obligations.
• Types of warranties and related obligations.
Remaining • Disclose the amount of the transaction price allocated to any remaining
performance performance obligations not subject to significant revenue reversal.
obligations • Disclose when the entity expects to recognise revenue associated
with the transaction price allocated to the remaining performance
obligations.
• Qualitatively describe any significant contract renewal and variable
consideration not included within the transaction price.
Cost to obtain or • Disclose disaggregated revenue information in categories (Disclose the
fulfil contract closing balances, by main category of asset, of capitalised costs to
obtain and fulfil a contract and the amount of amortisation in the period.
• Disclose the method used to determine the amount of costs incurred
and the amortisation for each reporting period.

PSAK 72 – Revenue from Contracts with Customers 20

 Disclosure type Disclosure requirement

Other qualitative • Disclose significant judgements and changes in judgements that affect
disclosures the amount and timing of revenue, including:
–– timing of satisfaction of performance obligations; and
–– transaction price and amount allocated to performance obligations.
• For performance obligations satisfied over time disclose:
–– methods used to recognise revenue (output or input method used
and how applied); and
–– why method used faithfully depicts transfer of goods or services.
• For performance obligations satisfied at a point in time disclose
significant judgements made in evaluating when customer obtains
control.
• Disclose information about the inputs, methods, and assumptions
used to determine the transaction price, assess whether variable
consideration is constrained, allocate transaction price, and determine
the stand-alone selling price.
• Disclose how management determines the minimum amount of revenue
not subject to the variable consideration constraint.
• Describe the practical expedients, including those for transition, used in
an entity’s revenue accounting policies.
Interim period Entities are required to only include the disclosures related to
disclosures disaggregation of revenue.

21 PSAK 72 – Revenue from Contracts with Customers

 PwC Indonesia contacts
For further help, please contact:

Jumadi Djohan Pinnarwan Jasmin Maranan

Partner Partner Advisor
[email protected] [email protected] [email protected]
Irwan Lau Helen Cuizon Dwi Jayanti
Director Advisor Senior Manager
[email protected] [email protected] [email protected]
Akuntina Novriani Jenifer Flitman Ponco Widagdo
Senior Manager Advisor Senior Manager
[email protected] [email protected] [email protected]
Elina Mihardja Arryu Amin Roymond Wong
Manager Manager Manager
[email protected] [email protected] [email protected]
Dariya Karasova
Advisor
[email protected]

PwC Indonesia
Jakarta Surabaya
WTC 3 Pakuwon Center
Jl. Jend. Sudirman Kav. 29-31 Tunjungan Plaza 5, 22nd Floor, Unit 05
Jakarta 12920 - INDONESIA Jl. Embong Malang No.1,3,5
T: +62 21 5212901 T: +62-31 99245759
F: +62 21 52905555 / 52905050 Surabaya 60261 INDONESIA
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