Question

Examine and explain your key areas of concern and issues in applying IFRS 15 for the 2020 financial year for the hospitality industry.

Answer 1

Key areas of concerns are

IFRS 15 requires the entity to identify all performance obligations in the contract entered with customers while providing hospitality services.

Each promised good or service as seperate performance obligations if the goods or services are distinct.

Therefore in hospitality industry there are many services provided to the customers that are distinct from one another. It will lead to numerous performance obligations which is difficult for seperate Accounting for every performance obligation.

Key issues are

Recognition of variable and uncertain revenues

Identification and allocation of revenue to different goods and services

Recognition of non refundable upfront payment in respect of services provided