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IFRS 15: New revenue realization in 2018

Implementation of SAP® Revenue Accounting and Reporting

Since 2004, the International Financial Reporting Standards (IFRS) for capital market-oriented companies in Germany and the EU as well as for many internationally oriented companies have been the binding set of rules for company accounting.

IFRS, the successor regulation to International Accounting Standards (IAS), is also becoming almost mandatory for mid-sized companies without a capital market orientation:

Investors or private equity companies require both internationally comparable company financial statements and investor-oriented accounting.

The framework of International Financial Reporting Standards (IFRS)

The IFRS rules and regulations are therefore primarily applied to the balance sheet, income statement and cash flow statement of companies. It consists of three elementary components:

  1. Framework concept
    In order to describe the open accounting issues that are not solved by standards, a framework concept exists that outlines the basic orientation of IFRS accounting.
  2. Standards (IFRS, IAS)
    Binding provision on the treatment of accounting issues so that an entity’s financial statements are recognised as IFRS financial statements.
  3. Interpretations
    Help in the application of IFRS rules and regulations

IFRS 15 –
new standard for revenue recognition

IFRS 15 “Revenue from contracts with customers” has been the standard for revenue recognition since 1 January 2017.

IFRS 15 establishes principles that regulate the recognition of revenue from the supply of goods or services in the event of a discrepancy between cash flow and actual performance.

A five-level framework model exists for this purpose:

  1. Identification of the contract(s) with a customer,
  2. Identification of independent service obligations in the contract,
  3. Determination of the transaction price,
  4. Distribution of the transaction price among the service obligations of the contract,
  5. Revenue recognition upon fulfillment of the service obligations by the company.

An introduction of IFRS 15, which is the result of cooperation between the International Accounting Standards Board (IASB) and the US equivalent Financial Accounting Standards Board (FASB), replaces the existing IFRS standards

  • IAS 11 Construction Contracts
  • IAS 18 Revenue
  • IFRIC 13 Customer Loyalty Programmes
  • IFRIC 15 Agreements for the Construction of Real Estate
  • IFRIC 18 Transfers of Assets from Customers
  • SIC-31 Revenue – exchange of advertising services

for the recognition of sales revenue.

SAP® Revenue Accounting and Reporting –
the solution for automated and simplified IFRS financial statements

With SAP® Revenue Accounting and Reporting, SAP SE has developed a product that supports SAP user companies in fulfilling regulations for revenue recognition and accounting processes in accordance with IFRS 15.

SAP® Revenue Accounting and Reporting provides the ideal basis for the realization of annual financial statements according to US-GAAP or IFRS.

Rapid implementation of SAP®
Revenue Accounting and Reporting with GAMBIT

In addition to cost realization, integration of capitalized costs in the SAP Project System and SAP Results Analysis, the new version SAP Revenue Accounting and Reporting 1.3 offers improved functions for contract adjustment and modification, integration with service and billing scenarios in SAP CRM, above all extended functions for the implementation of the new accounting standard IFRS 15.

In addition, functionalities are provided for the first time that ensure foreign currency treatment in accordance with IAS 21 and ASC 830.

GAMBIT Consulting supports companies with a fast and individual implementation, customizing, migration of contract data and an extensive training program for the optimal use of SAP® Revenue Accounting and Reporting.

Implementation of SAP®
Revenue Accounting and Reporting

Since 2004, the International Financial Reporting Standards (IFRS) for capital market-oriented companies in Germany and the EU as well as for many internationally oriented companies have been the binding set of rules for company accounting.

IFRS 15 –
new standard for revenue realization

IFRS 15 "Revenue from contracts with customers" has been the standard for revenue recognition since 1 January 2017. IFRS 15 establishes principles that regulate the recognition of revenue from the supply of goods or services in the event of a discrepancy between cash flow and actual performance.

SAP® Revenue Accounting and Reporting -
the solution for automated and simplified IFRS financial statements

With SAP® Revenue Accounting and Reporting, SAP SE has developed a product that supports SAP user companies in fulfilling regulations for revenue recognition and accounting processes in accordance with IFRS 15.

SAP® Revenue Accounting and Reporting provides the ideal basis for the realization of annual financial statements according to US-GAAP or IFRS.

Rapid implementation of SAP®
Revenue Accounting and Reporting with GAMBIT

In addition to cost realization, integration of capitalized costs in the SAP Project System and SAP Results Analysis, the new version SAP Revenue Accounting and Reporting 1.3 offers improved functions for contract adjustment and modification, integration with service and billing scenarios in SAP CRM, above all extended functions for the implementation of the new accounting standard IFRS 15.

GAMBIT Consulting supports companies with a fast and individual implementation, customizing, migration of contract data and an extensive training program for the optimal use of SAP® Revenue Accounting and Reporting.