TRANSITIONING TO THE NEW REVENUE STANDARD – WHAT ARE YOUR OPTIONS?

For Tier 1 and Tier 2 for-profit entities, there are three ways you can transition when first applying NZ IFRS 15 Revenue from Contracts with Customers:

Retrospective method
Retrospective method with (any or all of the four) practical expedients, or
Cumulative effect method.

Given that the transition date for the new revenue standard is less than a year away for Tier 1 and Tier 2 for-profit entities with 31 December year ends, we recommend that you start planning your transition process now as there is a significant amount of work required to determine the impact of each of these transition methods.

For more information on the differences in these three methods, and to get an idea of which method will be most appropriate for your entity, BDO’s articl e in the Chartered Accountants Australia and New Zealand’s Perspective is helpful when deciding which transition route to take when first applying NZ IFRS 15. (Note the Australian standard AASB 15 Revenue from Contracts with Customers is identical to NZ IFRS 15).

For more on the above, please contact your local BDO representative.