Under IFRS 15 and ASC 606, when is revenue generally recognized?

• A. When control of the goods or services has transferred to the customer
• B. At the time of invoice issuance
• C. Upon cash receipt
• D. When the seller has completed all performance obligations regardless of transfer

Answer: (A)

Revenue is recognized when control of the goods or services transfers to the customer. IFRS 15 and ASC 606 use a control-based model, so the timing of revenue depends on when the customer gains the ability to direct the use of, and obtain the benefits from, the asset or service. This can happen at a point in time (for many goods, when possession or title and significant risks and rewards transfer) or over time (for many services or long-term contracts, as the service is performed and the customer receives the benefits). Billing or cash receipt by itself does not determine when revenue is recognized, and revenue does not wait for all contractual obligations to be completed if control has already transferred for the delivered part.