IFRS 11 vs. IFRS 15

Attribute	IFRS 11	IFRS 15
Scope	Joint arrangements	Revenue from contracts with customers
Effective date	January 1, 2013	January 1, 2018
Measurement	Equity method	Transaction price
Disclosure requirements	Extensive disclosures about interests in joint arrangements	Extensive disclosures about revenue recognition

Scope and Objective

IFRS 11 deals with joint arrangements, which are arrangements in which two or more parties have joint control over the arrangement. The standard provides guidance on how to account for joint operations, joint ventures, and joint assets. On the other hand, IFRS 15 focuses on revenue recognition and provides a comprehensive framework for recognizing revenue from contracts with customers. The objective of IFRS 15 is to provide a single, principles-based standard for revenue recognition across all industries and jurisdictions.

Measurement

IFRS 11 requires entities to account for joint arrangements using the equity method or proportionate consolidation method, depending on the level of control the parties have over the arrangement. Under the equity method, the entity recognizes its share of the assets, liabilities, revenues, and expenses of the joint arrangement. In contrast, IFRS 15 requires entities to measure revenue based on the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The standard provides guidance on how to determine the transaction price, allocate the transaction price to performance obligations, and recognize revenue when the performance obligations are satisfied.

Disclosure Requirements

IFRS 11 requires entities to disclose information about their interests in joint arrangements, including the nature and extent of their involvement in the arrangement, the rights and obligations of the parties, and the significant terms and conditions of the arrangement. Entities are also required to disclose the amounts recognized in the financial statements for joint arrangements and the accounting policies adopted for joint arrangements. Similarly, IFRS 15 requires entities to provide extensive disclosures about their revenue recognition policies, including the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Entities are also required to disclose information about significant judgments and estimates used in applying the standard.

Transition and Effective Date

IFRS 11 was issued in May 2011 and became effective for annual periods beginning on or after January 1, 2013. The standard requires retrospective application, meaning that entities are required to apply the standard to all existing joint arrangements as of the effective date. In contrast, IFRS 15 was issued in May 2014 and became effective for annual periods beginning on or after January 1, 2018. The standard allows entities to choose between two transition methods: full retrospective application or modified retrospective application. Under the full retrospective method, entities restate prior periods as if the standard had always been applied, while under the modified retrospective method, entities recognize the cumulative effect of applying the standard as an adjustment to the opening balance of retained earnings.

Impact on Financial Statements

IFRS 11 may have a significant impact on the financial statements of entities that have joint arrangements, as the standard requires entities to account for these arrangements using the equity method or proportionate consolidation method. This could result in changes to the entity's reported assets, liabilities, revenues, and expenses. On the other hand, IFRS 15 may also have a significant impact on the financial statements of entities that enter into contracts with customers, as the standard introduces a new framework for revenue recognition that could change the timing and amount of revenue recognized. Entities may need to make changes to their accounting policies, systems, and processes to comply with the requirements of IFRS 15.

Conclusion

Overall, while IFRS 11 and IFRS 15 are both important accounting standards issued by the International Accounting Standards Board, they address different aspects of financial reporting. IFRS 11 focuses on joint arrangements, while IFRS 15 focuses on revenue recognition. Both standards have specific measurement, disclosure, transition, and effective date requirements that entities must comply with. Entities should carefully consider the implications of these standards on their financial statements and ensure that they have the necessary systems and processes in place to comply with the requirements of IFRS 11 and IFRS 15.