Paras 35 and 36 specify when and entity transfers control of a good or service over time and, hence when an entity satisfies a performance obligation and recognizes revenue over time. Do you agree with that proposal? If not, what alternative do you recommend for determining when a good or service is transferred over time and why?

The G100 supports the clarification of the requirements where the transfer of control of a good or service occurs over time.

Paras 68 and 69 state that an entity would apply IFRS 9 (or IAS 39, if the entity has not yet adopted IFRS9) or ASC Topic 310 to account for amounts of promised consideration that the entity assesses to be uncollectible because of a customer's credit risk. The corresponding amounts in profit or loss would be presented as a separate line item adjacent to the revenue line item. Do you agree with those proposals? If not, what alternative do you recommend to account for the effects of a customer's credit risk and why?

The G100 believes that uncollectable amounts arising from a customer's credit risk should not be included in the measurement of revenue because the impact of credit losses is a separate exercise from the generation of revenue and, as such, netting of the results of the two separate activities would not provide useful information to shareholders and other users. While the proposed changes address these concerns, in part, the presentation as a separate line item adjacent to revenue will also impact on the gross margin. It is suggested that explanation of what is meant by "adjacent to revenue" would be helpful in clarifying how the item should be presented.

The G100 considers that credit/risk losses should be addressed in accordance with the requirements of IFRS 9 "Financial Instruments" relating to the impairment of financial assets.

Para 81 states that if the amount of consideration to which an entity will be entitled is variable, the cumulative amount of revenue the entity recognizes to date should not exceed the amount to which the entity is reasonably assured to be entitled. An entity is reasonably assured to be entitled to the amount allocated to satisfied performance obligations only if the entity has experience with similar performance obligations and that experience is predictive of the amount of consideration to which the entity will be entitled. Para 82 lists indicators of when an entity's experience may not be predictive of the amount of consideration to which the entity will be entitled in exchange for satisfying those performance obligations. Do you agree with the proposed constraint on the amount of revenue that an entity would recognize for satisfied performance obligations? If not, what alternative constraint do you recommend and why?

The G100 has the following concerns about the proposals:

• it is not clear whether the 'reasonably assured' test is more stringent than tests applied in the conceptual framework for the recognition of an asset. We consider that the grounds for the shift from a 'probable' test to 'reasonably assured', if retained, should be explained;
  
  
• the application of the indicators in paragraph 82 may be unreasonable for those entities which do not have the requisite experience with similar types of performance obligations. We consider that acceptable 'other evidence' would include experience in the industry where the entity does not have direct experience;
  
  
• the choice in respect of measuring variable consideration. The G100 believes that one method should be specified as the standard and believe that the amount recognized should be the most likely amount of cash flows to which the entity becomes entitled from the transaction; and
  
  
• the inclusion of a rule in paragraph 85 preventing the recognition of sales based royalties until the additional royalty is certain is inconsistent with current practices and the principle stated in paragraph 81. Entities should be able to apply the principles in paragraph 81 based on their experience and other evidence.
  
  

For a performance obligation that an entity satisfies over time and expects at contract inception to satisfy over a period of time greater than one year, paragraph 86 states that the entity should recognize a liability and a corresponding expense if the performance obligation is onerous. Do you agree with the proposed scope of the onerous test? If not, what alternative scope do you recommend and why?

The G100 is concerned that the requirements relating to onerous contracts applies selectively to contracts having duration in excess of one year. If the principle is robust it should apply to all contracts irrespective of their duration. While such an approach may reasonably be adopted on pragmatic grounds, failure to recognize the impact of onerous performance obligations on contracts with less than a one-year term may distort the presentation of results in interim periods.

The Boards propose to amend IAS 34 and ASC Topic 270 to specify the disclosures about revenue and contracts with customers that an entity should include in its interim financial reports. The disclosures that would be required (if material) are:

• The disaggregation of revenue (paras 114 and 115).
  
  
• A tabular reconciliation of the movements in the aggregate balance of contract assets and contract liabilities for the current reporting period (para 117).
  
  
• An analysis of the entity's remaining performance obligations (paras 119-121).
  
  
• Information on onerous performance obligations and a tabular reconciliation of the movements in the corresponding onerous liability for the current reporting period (paras 122 and 123).
  
  
• A tabular reconciliation of the movements of the assets recognized from the costs to obtain or fulfill a contract with a customer (para 128).

Do you agree that an entity should be required to provide each of those disclosures in its interim financial reports? In your response, please comment on whether those proposed disclosures achieve an appropriate balance between the benefits of users of having that information and the costs to entities to prepare and audit that information. If you think that the proposed disclosures do not appropriately balance those benefits and costs, please identify the disclosures that an entity should be required to include in its interim financial reports.

No. The G100 does not believe the detailed disclosures proposed for interim reports can be justified on a cost-benefit basis.

On the one hand the Board is specifying a disclosure objective/principle and argues (BC246) that it enables the preparer to 'assess' whether the overall quality and information value of its revenue disclosures are sufficient to meet users' needs… "and avoid the need for detailed and prescriptive disclosure requirements…" while proposing such detailed disclosures in both annual and interim reports.

If the Board is to specify a disclosure objective/principle then, consistent with applying the principle, detailed disclosures should not be prescribed. Rather, the Board should provide guidance as to the nature and type of disclosures which, in its view, would be consistent with satisfying the disclosure principle.

For the transfer of a non-financial asset that is not an output of an entity's ordinary activities (for example, property, plant and equipment within the scope of IAS 16 or IAS 40, or ASC Topic 360), the boards propose amending other standards to require that an entity apply (a) the proposed requirements on control to determine when to derecognize the asset, and (b) the proposed measurement requirements to determine the amount of gain or loss to recognize upon derecognition of the asset.

Do you agree that an entity should apply the proposed control and measurement requirements to account for the transfer of non-financial assets that are not an output of an entity's ordinary activities? If not, what alternative do you recommend and why?

The G100 agrees with these proposals.