Circular 2/2017 – Determining Revenue/Purchases as a result of financing components

This Circular deals only with the initial identification of a financing component by sellers or buyers of goods in transactions that possibly contain financing elements. The assessment of whether the financing component should be separately identified and recognised – and the related determination of the sale and purchase price – should be performed on initial recognition at a contract or transaction level and not at a portfolio level. The Circular considers only the specific topic of identifying a financing component in revenue and purchase transactions. Other factors such as subsequent measurement of the debtors or creditors, disclosure or the deferred tax implications are not addressed. Entities that have applied IFRS 15 should not apply the guidance provided in this Circular in relation to revenue, but should apply the guidance contained in IFRS 15. This Circular does not provide guidance for the application of transactions falling within the scope of IFRS 15.