One total price does not mean one promise
In a fictional model equipment sells separately for 90, one year of service for 30 and the bundle for 108. Standalone total is 120. Allocate 108×90/120=81 to equipment and 108×30/120=27 to service. The discount is allocated under the stated model, not pushed entirely into service to accelerate revenue.
Assume equipment transfers immediately and service is provided evenly over twelve months. After three months, service revenue is 6.75; with equipment, recognised revenue is 87.75. If the customer paid 108 immediately, the difference is the unperformed part of the model, not extra earned profit.
Price uncertainty differs from non-payment risk
Quality bonuses, return rights and volume discounts can change expected consideration. IFRS 15 requires estimating variable consideration; the maximum bonus is not necessarily recognised revenue. Full standard and contract terms are needed for the constraint.[curr-stat-ifrs15]
Whether a customer will fail to pay an amount already due is different. IFRS 9 governs expected credit losses for relevant financial claims.[curr-stat-ifrs9-text] Do not automatically reduce revenue for every overdue balance or call every price change a credit loss; establish the reason first.
Do not accelerate through the invoice calendar
An invoice may be issued in advance, after a stage or at contract end. One bundled payment does not make equipment and service simultaneous. A signed acceptance act is not automatically proof that every promise is complete. Use a table: promise, transfer time, allocated price, cash received and remaining obligation.
Do not divide the entire contract into months merely because it lasts a year. Equipment transfers at a point; service over time. Revenue is not simply cash spread across dates.
Practical limitation
Check standalone prices, the basis for identifying promises, return terms and progress measurement. If facts are undisclosed, state a range of uncertainty instead of inventing precise allocation. This complements [revenue recognition](/guides/revenue-recognition/) and focuses on a mixed bundle and variable amount; [profit versus cash](/guides/profit-vs-cash/) covers the cash side.
Treat changes as a separate control point
A contract may renew, add items or change service volume. Determine whether only payment date changed or the promised content changed. Not every annex is a new independent contract, but not every change can be absorbed into the old calendar. Record the event and find its effect in the full standard and facts.
Compare remaining promised amounts with future performance time. If service revenue accelerates without a change in service volume, ask about price, bundle composition and progress measurement. It does not prove a violation, but requires a substantive explanation. For returns and bonuses do not apply one universal percentage; review the basis and revise it when product, market or sales terms change.
Three meanings of deferred result
“Deferred profit” is not by itself a universal IFRS 15 line. Determine whether revenue, costs or both are deferred, what remains promised and whether price is uncertain. A contract liability is the obligation to transfer goods or services for consideration received or due, not a precomputed margin. Under the illustrative source, if a post-delivery price-protection right exists, analyse variable consideration and its constraint rather than automatically deferring all gross profit until protection expires.
For a fictional annual service, the customer pays 144 in advance and service is even; expected future cost is 7 per month. On receipt, contract liability is 144. Expected future margin 144−84=60 is not that liability. After three months revenue is 36, costs 21, profit before tax 15 and unperformed service liability 108. Remaining expected margin is 45, but it cannot be subtracted from liability 108 to create a new balance.
For tax comparison only, assume all advance is taxable on receipt, 21 cost is deductible when incurred, tax rate is 20% and deferred-asset conditions are met. Tax profit is 123, current tax 24.6. Liability 108 has zero tax base because related future revenue was already taxed. Deductible temporary difference 108 creates deferred tax asset 21.6; tax expense is 24.6−21.6=3, or 20% of accounting profit 15. This is not a current advance-tax regime of any country. Margin 45, liability 108 and tax asset 21.6 answer three different questions.
Returns: revenue, cash refund and returned goods
Under IFRS 15, a sale with a right of return separates revenue, refund liability and the asset for the right to recover goods, reduced for expected return costs and value decline. This is not an expected credit-loss allowance: the reduction arises from the customer’s contractual right, not insolvency.
A shop delivers and receives payment for 50 units at 12 each; cost is 7 each. It expects four returns. With zero return costs and damage: cash 600, revenue 46×12=552, refund liability 48, recovery asset 4×7=28, cost expense 350−28=322 and gross profit 230. Net asset increase 600−350+28=278 equals liability 48 plus profit 230. Do not recognise revenue 600 with only expected cost 322.
If expected returns rise from four to six, liability rises 24, revenue falls 24, recovery asset rises 14, cost falls 14 and profit falls 10. Later refund payment settles the liability; it is not a second expense. Re-estimate at each reporting date.
Quality warranty and service are not interchangeable
A warranty for agreed characteristics is generally analysed under IAS 37; an additional service is a separate IFRS 15 promise. If the warranty can be bought separately, it is a separate service. Without separate sale, examine substance, term and promise character; “warranty” alone cannot classify it. Do not count one promise twice as a full warranty expense and the same unperformed service revenue. Historical disputes do not create a free choice among immediate, partial and deferred results; the conclusion follows the applicable standard and actual performance.