PRACTICAL ASPECTS OF IFRS 15 IN THE ACTIVITY OF A MOBILE OPERATOR

Abstract

The regulatory framework for recognizing revenue from contracts with customers is contained in the International Financial Reporting Standard (IFRS) 15 Revenue from Contracts with Customers (the current revenue standard), which was published in an EU regulation from 2016 amending Regulation (EC) No 1126/2008. The application of IFRS 15 began on January 1, 2018. This standard replaces the old International Accounting Standard (IAS) 18 Revenue, and through IFRS 15 Revenue from Contracts with Customers, it provides a framework for disclosing information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts under the standard. The principle that the standard primarily follows is that an entity recognizes revenue to reflect the transfer of promised goods and services to the customer in an amount that corresponds to the consideration to which the company expects to be entitled in exchange for those goods and services. In this regard, a five-step model has been developed, which is applicable in all cases of its practical application.
The current text of IFRS 15 is published in the Official Journal of the European Union through Regulation No 1803/13.09.2023, adopted by the European Commission to replace the international accounting standards (published in 2022 by the Regulation of the European Parliament and Council).
Revenue represents an increase in economic benefits for enterprises within a specific reporting period (for tax purposes coinciding with the calendar year) in the form of an increase in assets or a decrease in liabilities, leading to a change in the company’s equity, different from contributions by owners. Revenue from the sale of services and/or goods in the activity of a mobile operator, as a subcategory of income, primarily forms the revenue from the ordinary activities of the enterprise. This includes revenue from sales, interest, dividends, fees, rents, etc. These and income from other transactions contribute to the formation of the financial result of the enterprise. The principle followed in IFRS 15 is that the entity recognizes revenue to document the transfer of the agreed services and/or goods to the customer in an amount that corresponds to the payment to which the entity expects to be entitled in exchange for those services and/or goods. To this end, a model consisting of five steps has been developed to be applied to all services and/or goods within the scope of the standard.
This study examines some practical applications of IFRS 15 regarding revenue from contracts for mobile services, deriving a model for their accounting. Mobile operators also offer many goods under certain conditions and subscriptions, such as mobile devices, cable and wireless TV and internet devices, and others. Thus, some of the contracts concluded between customers and the operator may be of a mixed type. That is, the customer may have purchased a mobile phone (goods) on installment and entered into a contract with the seller for a mobile plan (service).