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IFRS - Revenue Recognition on internet ads

IFRS 15 - internet ad recognition

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A company's revenue is generated via it's website through advertisements on a 'cost per click' basis. I.e every time a user clicks on an advertisement, they get paid by the advertising company. Under IFRS 15, the performance obligation is 'the user clicks the ad' - at which point the revenue should be recognised.

However, if the company invoice at the end of each month is there a small immaterial timing difference between the date the revenue is recognised and when the performance obligation was satisifed?

 

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By Paul Crowley
17th Jun 2021 12:58

Yes, sounds like it.
Maybe a judgement is needed, based on prior patterns.

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By Bobbo
17th Jun 2021 13:05

This invoice at the end of each month, what period does it cover up to?
E.g. is it invoice dated 30th June 2021 which covers all clicks up to say 12 noon on the 30th? (I assume with things like internet ad clicks it is possible to get pretty much real time information about numbers of clicks).

Or is it invoice dated 30th June 2021 which covers all clicks up to say 20th / 25th / 28th June? (i.e. there is some earlier cut-off point with any clicks after this going to the next month's invoice.)

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Replying to Bobbo:
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By Balboa120
17th Jun 2021 14:59

The invoice would be dated as the last day of the month, with all the clicks registered to the previous day - i.e one day prior to the end of the month.

I would assume that the Company would have to accrue that last day/the auditors assess the materiality of that last day to see if it is worth adjusting

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By paul.benny
17th Jun 2021 13:59

Balboa120 wrote:
... if the company invoice at the end of each month is there a small immaterial timing difference between the date the revenue is recognised and when the performance obligation was satisifed?

Yes.
What reporting might that affect?

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Replying to paul.benny:
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By Balboa120
17th Jun 2021 15:03

From a month end reporting stance, it wouldn't affect anything. I am just unsure at how strict you have to be with regards to IFRS 15 and allocating transaction/performance obligation.

For example, if a 'click' is the only obligation satisfied and revenue should be recognised on the 15th of that month, is having it recorded at the end of the month via one invoice an issue if the purposes of the statements would just be monthly reporting/year end stats and audit?

I have assumed it is not an issue so long as month end/year end figures have been assessed.

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Replying to Balboa120:
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By paul.benny
18th Jun 2021 10:27

It's only remotely significant if the timing difference crosses the end of a reporting period.

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