CVM Resolution 116: Approval of Consolidated Technical Pronouncement CPC 47 on Revenue from Contracts with Customers

COMMISSION OF SECURITIES AND EXCHANGE COMMISSION (CVM) Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – ZIP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – ZIP: 01333-010 – Brazil - Tel.: (11) 2146-2000

Approves the Consolidation of Technical Pronouncement CPC 47 of the Accounting Pronouncements Committee – CPC, which deals with revenue from contracts with customers.

THE PRESIDENT OF THE COMMISSION OF SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Board, in a meeting held on April 14, 2022, based on §§ 3 and 5 of art. 177 of Law No. 6.404, of December 15, 1976, combined with items II and IV of § 1 of art. 22 of Law No. 6.385, of December 7, 1976, as well as arts. 5 and 14 of Decree No. 10.139, of November 28, 2019,

APPROVED the following Resolution:

Art. 1. It makes mandatory for publicly-held companies the Technical Pronouncement CPC 47, which deals with revenue from contracts with customers, issued by the Accounting Pronouncements Committee - CPC, as consolidated in Annex “A” to this Resolution.

Art. 2. Deliberation 762, of December 22, 2016, is revoked, from the effectiveness of this Resolution.

Art. 3. This Resolution enters into force on July 1, 2022.

Electronically signed by
Marcelo Barbosa
President

ANNEX “A”
ACCOUNTING PRONOUNCEMENTS COMMITTEE
TECHNICAL PRONOUNCEMENT CPC 47
REVENUE FROM CONTRACTS WITH CUSTOMERS
Correlation to International Financial Reporting Standards – IFRS 15

Summary Item
OBJECTIVE 1 – 4
SCOPE 5 – 8
RECOGNITION 9 – 45
Identification of the contract 9 – 16
Combination of contracts 17
Modification of contract 18 – 21
Identification of performance obligation 22 – 30 Satisfaction of performance obligation 31 – 45 MEASUREMENT 46 – 90 Determination of the transaction price 47 – 72 Allocation of the transaction price to performance obligation 73 – 86 Changes in the transaction price 87 – 90 CONTRACT COSTS 91 – 104 Incremental cost to obtain a contract 91 – 94 Cost to fulfill the contract 95 – 98 Amortization and impairment 99 – 104 PRESENTATION 105 – 109 DISCLOSURE 110 – 129 Contract with customer 113 – 122 Significant judgments in applying this pronouncement 123 – 126 Assets recognized from costs to obtain or fulfill contract with customer 127 – 128 Practical expedients 129
Appendix A – Definition of terms
Appendix B – Application guidance
Appendix C – Effective date and transition

Objective

The objective of this pronouncement is to establish the principles that the entity should apply to present useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
The basic principle of this pronouncement is that the entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The entity should consider the terms of the contract and all relevant facts and circumstances when applying this pronouncement. The entity should apply this pronouncement, including the use of practical expedients, consistently to contracts with similar characteristics and in similar circumstances.
This pronouncement specifies the accounting for an individual contract with a customer. However, as a practical expedient, the entity may apply this pronouncement to a portfolio of contracts (or of performance obligations 1) with similar characteristics if that entity reasonably expects that the effects on the financial statements of applying this pronouncement to the portfolio would not differ significantly from applying this pronouncement to the individual contracts (or performance obligations) within that portfolio. When accounting for the portfolio, the entity should use estimates and assumptions that reflect the size and composition of the portfolio.

Scope
5. The entity should apply this pronouncement to all contracts with customers except the following:
(a) lease contracts within the scope of CPC 06 – Leases; (b) insurance contracts within the scope of CPC 11 – Insurance Contracts; (c) financial instruments and other contractual rights or obligations within the scope of CPC 48 – Financial Instruments, CPC 36 – Consolidated Statements, CPC 19 – Joint Arrangements, CPC 35 – Separate Statements, and CPC 18 – Investment in Associate, Subsidiary, and Jointly Controlled Entity; and (d) non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers. For example, this pronouncement does not apply to a contract between two oil and gas companies that agree to exchange oil to satisfy the demand of their customers in different specified locations, in a timely manner.

The entity should apply this pronouncement to the contract (except contracts listed in item 5) only if the counterparty to the contract is a customer. A customer is the party that has contracted with the entity to obtain goods or services that are an output of the ordinary activities of the entity in exchange for consideration. The counterparty to the contract will not be considered a customer if, for example, the counterparty has contracted with the entity for its participation in an activity or process in which the parties to the contract share the risks and benefits that result from the activity or process (such as, for example, the development of an asset under a collaboration agreement) and not to obtain the output of the ordinary activities of the entity.

1 The term “performance obligation” in this pronouncement refers to the obligation of the selling entity to perform its obligation to transfer control of the good or service to the buying entity.

A contract with a customer may be partially within the scope of this pronouncement and partially within the scope of other pronouncements listed in item 5:
(a) if other pronouncements specify how to separate and/or initially measure one or more parts of the contract, then the entity should first apply the separation and/or measurement requirements of those pronouncements. The entity should exclude from the transaction price the amount of the part (or parts) of the contract that is initially measured, according to other pronouncements, and should apply items 73 to 86 to allocate the remaining transaction price amount (if any) to each performance obligation within the scope of this pronouncement, and to any other parts of the contract identified by item 7(b); (b) if other pronouncements do not specify how to separate and/or initially measure one or more parts of the contract, then the entity should apply this pronouncement to separate and/or initially measure the part (or parts) of the contract.
This pronouncement specifies the accounting for incremental costs to obtain a contract with a customer and costs incurred to fulfill the contract with the customer, if those costs are not within the scope of another pronouncement (see items 91 to 104). The entity should apply these items only to costs incurred that correspond to the contract with the customer (or part of that contract) that is within the scope of this pronouncement.

Recognition
Identification of the contract
9. The entity should account for the effects of a contract with a customer that is within the scope of this pronouncement only when all of the following criteria are met:
(a) when the parties to the contract have approved the contract (in writing, orally, or in accordance with other usual business practices) and are committed to perform their respective obligations; (b) when the entity can identify each party’s rights regarding the goods or services to be transferred; (c) when the entity can identify the payment terms for the goods or services to be transferred; (d) when the contract has commercial substance (i.e., the risk, timing, or amount of the entity’s future cash flows are expected to change as a result of the contract); and (e) when it is probable that the entity will receive the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In assessing whether the possibility of receiving the consideration amount is probable, the entity should consider only the customer’s ability and intention to pay that amount of consideration when due. The amount of consideration to which the entity is entitled

may be lower than the price stated in the contract if the consideration is variable, because the entity may offer the customer a price reduction (see item 52).

A contract is an agreement between two or more parties that creates enforceable rights and obligations. The enforceability of rights and obligations in a contract is a legal matter. Contracts can be written, oral, or implied by the entity’s usual business practices. The practices and processes for establishing contracts with customers vary among jurisdictions, industries, and entities. In addition, they may vary within the entity (for example, they may depend on the class of customer or the nature of the goods or services promised). The entity should consider these practices and processes when determining whether and when an agreement with the customer creates enforceable rights and obligations.
Some contracts with customers may have no fixed duration and may be terminated or modified by any of the parties at any time. Other contracts may be renewed periodically automatically, as long as it is specified in the contract. The entity should apply this pronouncement to the duration of the contract (i.e., the contractual term), in which the parties to the contract have present enforceable rights and obligations.
For the purposes of applying this pronouncement, a contract does not exist if each party to the contract has the unconditional (enforceable) right to terminate the unfulfilled contract entirely, without compensating the other party (or parties). The contract is entirely unfulfilled if both of the following criteria are met:
(a) the entity has not yet transferred any promised goods or services to the customer; and (b) the entity has not yet received and does not yet have the right to receive any consideration in exchange for the goods or services.
If the contract with the customer meets the criteria of item 9 at the inception of the contract, the entity should not reassess those criteria unless there is an indication of a significant change in facts and circumstances. For example, if the customer’s ability to pay the consideration deteriorates significantly, the entity should reassess whether it is probable that it will receive the consideration to which it will be entitled in exchange for the remaining goods or services that will be transferred to the customer.
If the contract with the customer does not meet the criteria of item 9, the entity should continue to evaluate the contract to determine whether the criteria of item 9 will be met subsequently.
When the contract with the customer does not meet the criteria of item 9 and the entity receives consideration from the customer, the entity should recognize the consideration received as revenue only when any of the following hypotheses have occurred:
(a) the entity has no remaining obligations to transfer goods or services to the customer, and the total, or practically the total, of the consideration promised by the customer has been received by the entity and is non-refundable; or (b) the contract has been terminated and the consideration received from the customer is non-refundable.
The entity should recognize the consideration received from the customer as a liability until one of the hypotheses of item 15 occurs or until the criteria of item 9 are subsequently met (see item 14). Depending on the facts and circumstances related to the contract, the recognized liability represents the entity’s obligation to transfer goods or services in the future or to refund the

consideration received. In either case, the liability should be measured by the amount of the consideration received from the customer.

Combination of contracts
17. The entity should combine two or more contracts entered into on the same date or close to that date with the same customer (or related parties of the customer) and should account for the contracts as a single contract if one or more of the following criteria are met:
(a) the contracts are negotiated as a package with a single commercial objective; (b) the amount of consideration to be paid by the contract depends on the price or performance of another contract; or (c) the goods or services promised in the contracts (or some goods or services promised in each of the contracts) constitute a single performance obligation according to items 22 to 30.

Modification of contract
18. A contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. In some sectors and jurisdictions, a contract modification may be described as a change in order, a variation, or an amendment. A contract modification exists when the parties to the contract approve the modification that creates new enforceable rights and obligations of the parties to the contract or that modifies existing enforceable rights and obligations. A contract modification may be approved in writing, by verbal agreement, or implied by usual business practices. If the parties to the contract have not approved the contract modification, the entity should continue to apply the existing contract to this pronouncement until the contract modification is approved.

A contract modification may exist even if the parties to the contract have a dispute over the scope or price (or both) of the modification or the parties have approved the change in the scope of the contract but have not yet determined the corresponding change in price. In determining whether the rights and obligations that are created or altered by a modification are enforceable, the entity should consider all relevant facts and circumstances, including the terms of the contract and other evidence. If the parties to the contract have approved the change in the scope of the contract but have not yet determined the corresponding change in price, the entity should estimate the change in the transaction price resulting from the modification according to items 50 to 54 when estimating variable consideration and according to items 56 to 58 when restricting estimates of variable consideration.
The entity should account for a contract modification as a separate contract if both of the following conditions are present:
(a) the scope of the contract increases due to the inclusion of goods or services promised that are distinct (according to items 26 to 30); and (b) the price of the contract increases by an amount of consideration that reflects the entity’s standalone selling prices of the additional promised goods or services and any appropriate adjustments to that price to reflect the circumstances of the specific contract. For example, the entity may adjust the standalone selling price of the additional good or service to reflect the

discount that the customer receives, because it is not necessary for the entity to incur the costs related to the sale that it would incur when selling a similar good or service to a new customer.

If the contract modification is not accounted for as a separate contract according to item 20, the entity should account for the goods or services promised that have not yet been transferred at the date of the contract modification (i.e., the remaining promised goods or services) by any of the following forms that are applicable:
(a) the entity should account for the contract modification as if it were the termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred at, or before, the date of the contract modification. The amount of consideration to be allocated to the remaining performance obligations (or to the remaining distinct goods or services or to a single performance obligation identified according to item 22(b)) is the sum of:
(i) consideration promised by the customer (including amounts already received from the customer) that was included in the estimate of the transaction price and had not yet been recognized as revenue; and (ii) consideration promised as part of the contract modification; (b) the entity should account for the contract modification as if it were part of the existing contract, if the remaining goods or services are not distinct and therefore form part of the single performance obligation that is partially satisfied at the date of the contract modification. The effect that the contract modification has on the transaction price and on the entity’s measurement of progress toward complete satisfaction of the performance obligation should be recognized as an adjustment to revenue (whether as an increase or reduction of revenue) at the date of the contract modification (i.e., the revenue adjustment is made on a cumulative basis); (c) if the remaining goods or services are a combination of items (a) and (b), then the entity should account for the effects of the modification on the unsatisfied (including partially unsatisfied) performance obligations in the modified contract consistently with the objectives of this item.

Identification of performance obligation
22. At the inception of the contract, the entity should evaluate the goods or services promised in a contract with a customer and should identify as a performance obligation each promise to transfer to the customer:
(a) a good or service (or group of goods or services) that is distinct; or (b) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer (see item 23).

A series of distinct goods or services has the same pattern of transfer to the customer if both of the following criteria are met:
(a) each distinct good or service in the series that the entity promises to transfer to the customer meets the criteria of item 35 for a performance obligation satisfied over time; and (b) in accordance with items 39 and 40, the same method is used to measure the entity’s progress toward complete satisfaction of the performance obligation to transfer to the customer each distinct good or service in the series.

Distinct goods or services
26. Depending on the contract, promised goods or services may include, among others, the following:
(a) sale of goods produced by the entity (for example, manufacturer's inventory); (b) resale of goods acquired by the entity (for example, retailer's merchandise); (c) resale of rights to goods or services acquired by the entity (for example, ticket resold by the entity, acting as principal, as described in items B34 to B38); (d) execution of task (or tasks) contractually agreed upon for the customer; (e) provision of a service consisting of being ready to provide goods or services (for example, unspecified software updates that are provided when and if available) or making goods or services available to the customer to be used as and when the customer decides; (f) provision of a service so as to arrange for the other party to transfer goods or services to the customer (for example, acting as an agent of another party, as described in items B34 to B38); (g) granting of rights to goods or services to be provided in the future that the customer may resell or provide to its customer (for example, the entity that sells a product to a retailer promises to transfer the additional good or service to the person who purchases the product from the retailer); (h) construction, manufacture, or development of an asset on behalf of the customer; (i) granting of licenses (see items B52 to B63B); and (j) granting of options to purchase additional goods or services (when these options provide the customer with a material right, as described in items B39 to B43).
27. A good or service promised to the customer is distinct if both of the following criteria are met:
(a) the customer can benefit from the good or service, either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and (b) the entity's promise to transfer the good or service to the customer is separately identifiable from other promises contained in the contract (i.e., the commitment to transfer the good or service is distinct within the context of the contract).

COMMISSION FOR SECURITIES AND CAPITAL MARKETS
Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – ZIP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – ZIP: 01333-010 – Brazil - Tel.: (11) 2146-2000
28. The customer can benefit from a good or service in accordance with item 27(a) if the good or service can be used, consumed, sold for a value that is higher than its scrap value, or otherwise realized in a way that generates economic benefits. For some goods or services, the customer may be able to benefit from the good or service on its own. For other goods or services, the customer may benefit from the good or service only together with other readily available resources. A readily available resource is a good or service that is sold separately (by the entity or by another entity) or a resource that the customer has already obtained from the entity (including goods or services that the entity will have already transferred to the customer in accordance with the contract) or from other transactions or events. Several factors may provide evidence that the customer can benefit from the good or service, either on its own or together with other readily available resources. For example, the fact that the entity regularly sells the good or service separately indicates that the customer can benefit from the good or service on its own or together with other readily available resources.
29. When assessing whether the entity's promises to transfer goods or services to the customer are separately identifiable in accordance with item 27(b), the objective is to determine whether the nature of the promise, within the context of the contract, is to transfer each of these goods or services individually or, instead, to transfer an item or items for which the promises of goods and services are inputs. Factors that indicate that two or more promises to transfer goods or services to the customer are not separately identifiable include, but are not limited to, the following:
(a) the entity does not provide a significant service of integrating the good or service, together with other goods or services promised in the contract, into the bundle of goods or services that represent the combined products contracted by the customer. In other words, the entity is not using the good or service as an input to produce or deliver the combined products specified by the customer. The outputs or combined outputs may include more than one phase, element, or unit; (b) one or more goods or services are significantly modified or customized, or are significantly modified or customized by one or more of the other goods or services promised in the contract; (c) the goods and services are highly interdependent or highly interrelated. In other words, each of the goods or services is significantly affected by one or more of the other goods and services in the contract. For example, in some cases, two or more goods or services are significantly affected by the other because the entity would not be able to fulfill its promise through the transfer of each of the goods or services independently.
30. If the promised good or service is not distinct, the entity must combine that good or service with other goods or services promised until it identifies the group of goods or services that is distinct. In some cases, this may result in the entity having to account for all goods or services promised in the contract as a single performance obligation.

Performance obligation satisfied over time
35. The entity transfers control of the good or service over time and, therefore, satisfies the performance obligation and recognizes revenue over time, if one of the following criteria is met:
(a) the customer receives and consumes simultaneously the benefits generated by the entity's performance as the entity performs (see items B3 and B4); (b) the entity's performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced (see item B5); or (c) the entity's performance does not create an asset with an alternative use for the entity (see item 36) and the entity has an enforceable right to payment for performance completed to date (see item 37).
36. The asset created by the entity's performance does not have an alternative use for the entity if the entity is contractually prohibited from readily directing the asset to another use during the creation or enhancement of that asset or is practically limited from readily directing the asset

Performance obligation satisfied at a specific point in time
38. If the performance obligation is not satisfied over time in accordance with items 35 to 37, the entity shall satisfy the performance obligation at a specific point in time. To determine the specific point in time at which the customer obtains control of the promised asset and the entity satisfies the performance obligation, the entity must consider the requirements for control, presented in items 31 to 34. In addition, the entity must consider the indicators of the transfer of control, which include, among others, the following:
(a) the entity has a present right to payment for the asset – if the customer is presently obliged to pay for the asset, this may indicate that the customer has obtained the ability to direct the use of the asset subject to exchange and to obtain, substantially, all of the remaining benefits of that asset; (b) the customer has legal title to the asset – legal title may indicate which part of the contract has the ability to direct the use of the asset and to obtain substantially all of the remaining benefits of that asset or to restrict the access of other entities to those benefits. Therefore, the transfer of legal title to the asset may indicate that the customer has obtained control of the asset. If the entity retains legal title exclusively as protection against the customer's non-payment, these rights of the entity do not prevent the customer from obtaining control of the asset; (c) the entity has transferred physical possession of the asset – physical possession of the asset by the customer may indicate that the customer has the ability to direct the use of the asset and to obtain substantially all of the remaining benefits of that asset or to restrict the access of other entities to those benefits. However, physical possession may not coincide with control of the asset. For example, in some repurchase contracts and in some consignment contracts, the customer or consignee may have physical possession of the asset that the entity controls. On the other hand, in some agreements where there is billing but no delivery (bill-and-hold), the entity may have physical possession of the asset that the customer controls. Items B64 to B76, B77 and B78, and B79 to B82 provide guidance on the accounting for repurchase contracts, consignment contracts, and sale agreements in which the delivery of the goods is delayed at the buyer's request (bill-and-hold), respectively;

Measurement of progress towards complete satisfaction of performance obligation
39. For each performance obligation satisfied over time in accordance with items 35 to 37, the entity must recognize revenue over time, measuring progress towards the complete satisfaction of that performance obligation. The objective in measuring progress is to describe the entity's performance in transferring control of goods or services promised to the customer (i.e., the satisfaction of the entity's performance obligation).
40. The entity must apply a single method of measuring progress for each performance obligation satisfied over time, and the entity must apply this method consistently to similar performance obligations and in similar circumstances. At the end of each accounting period to which these financial statements relate, the entity must remeasure its progress towards the complete satisfaction of the performance obligation satisfied over time.

Methods for measuring progress
41. Appropriate methods of measuring progress include output methods and input methods. Items B14 to B19 provide guidance on the use of output methods and input methods to measure the entity's progress towards the complete satisfaction of the performance obligation. When determining the appropriate method to measure progress, the entity must consider the nature of the good or service that the entity has promised to transfer to the customer.
42. When applying a method to measure progress, the entity must exclude from the measurement of progress any goods or services for which the entity does not transfer control to the customer. Conversely, the entity must include in the measurement of progress any goods or services for which the entity effectively transfers control to the customer in satisfying that performance obligation.
43. As circumstances change over time, the entity must update its measurement of progress to reflect any changes in the outcome of the performance obligation. These changes in the entity's measurement of progress must be accounted for as a change in accounting estimate in accordance with CPC 23 – Accounting Policies, Change in Estimates and Correction of Errors.

Measurement
46. When (or as) a performance obligation is satisfied, the entity must recognize as revenue the value of the transaction price (which excludes estimates of variable consideration that are constrained in accordance with items 56 to 58), which must be allocated to that performance obligation.

Determination of the transaction price
47. The entity must consider the terms of the contract and its usual business practices to determine the transaction price. The transaction price is the value of the consideration to which the entity expects to be entitled in exchange for transferring the goods or services promised to the customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with the customer may include fixed amounts, variable amounts, or both.
48. The nature, timing, and value of the consideration promised by the customer affect the estimate of the transaction price. When determining the transaction price, the entity must consider the effects of all of the following items:
(a) variable consideration (see items 50 to 55 and 59); (b) constraint on estimates of variable consideration (see items 56 to 58); (c) existence of a significant financing component in the contract (see items 60 to 65); (d) non-monetary consideration (see items 66 to 69); and (e) consideration payable to the customer (see items 70 to 72).
49. For the purposes of determining the transaction price, the entity must presume that the goods or services will be transferred to the customer as promised, in accordance with the existing contract, which will not be cancelled, renewed, or modified.

Variable consideration

If the consideration promised in the contract includes a variable amount, the entity shall estimate the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer.
The amount of consideration can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items. The promised consideration can also vary if the entity’s right to consideration is conditional on the occurrence or non-occurrence of a future event. For example, the consideration is variable if the product is sold with a right of return or if a fixed amount is promised as a performance bonus contingent on achieving a specified milestone.
The variability relating to the consideration promised to the customer may be stated explicitly in the contract. In addition to the contract terms, the promised consideration is variable if any of the following circumstances exist:
(a) the customer has a valid expectation arising from the entity’s customary business practices, published policies, or specific statements that the entity will accept an amount of consideration that is less than the price stated in the contract. That is, the entity is expected to offer a price concession. Depending on the jurisdiction, industry, or customer, this offer may be referred to as a discount, rebate, refund, or credit; (b) other facts and circumstances indicate that the entity’s intention, when entering into the contract with the customer, is to offer a price concession to the customer.
The entity shall estimate the amount of variable consideration by using either of the following methods, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled:
(a) the expected value – the expected value is the sum of probability-weighted amounts in a range of possible consideration amounts. The expected value may be an appropriate estimate of the amount of variable consideration if the entity has a large number of contracts with similar characteristics; (b) the most likely amount – the most likely amount is the single most likely amount in a range of possible consideration amounts (that is, the single most likely outcome of the contract). The most likely amount may be an appropriate estimate of the amount of variable consideration if the contract has only two possible outcomes (for example, the entity either achieves a performance bonus or does not).
The entity shall apply one method consistently throughout the contract when estimating the effect of uncertainty on the amount of variable consideration to which the entity expects to be entitled. In addition, the entity shall consider all information (historical, current, and forecasted) that is reasonably available to the entity and shall identify a reasonable number of possible consideration amounts. The information that the entity uses to estimate the amount of variable consideration is generally similar to the information that the entity’s management uses during the planning and bidding process and in establishing prices for promised goods or services.

Refund liability

The entity shall recognize a refund liability if the entity receives consideration from a customer and expects to refund some or all of that consideration to the customer. The refund liability shall be measured at the amount of consideration received (or receivable) for which the entity does not expect to be entitled (that is, amounts not included in the transaction price). The refund liability (and the corresponding adjustment to the transaction price and, therefore, to the contract liability) shall be updated at the end of each reporting period for changes in circumstances. To account for the refund liability relating to sales with a right of return, the entity shall apply the guidance in paragraphs B20–B27.

Constraint on estimates of variable consideration

The entity shall include in the transaction price some or all of an estimated amount of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
In assessing whether it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty related to the variable consideration is subsequently resolved, the entity shall consider both the likelihood and the magnitude of the revenue reversal. Factors that could increase the likelihood or the magnitude of a revenue reversal include, but are not limited to, any of the following:
(a) the amount of consideration is highly susceptible to factors outside the entity’s influence. Those factors may include volatility in the market, judgements or actions of third parties, weather conditions, and a high risk of obsolescence of the promised good or service; (b) the uncertainty about the amount of consideration is not expected to be resolved for a long period of time; (c) the entity’s experience (or other evidence) with similar types of contracts is limited or that experience (or other evidence) has limited predictive value; (d) the entity has a practice of offering a broad range of price concessions or changing the payment terms and conditions of similar contracts in similar circumstances; (e) the contract has a large number and broad range of possible consideration amounts.
The entity shall apply paragraph B63 to account for consideration in the form of sales- or usage-based royalties promised in exchange for a license of intellectual property.

Reassessment of variable consideration

At the end of each reporting period, the entity shall update the estimated transaction price (including updating its assessment of whether an estimate of variable consideration is constrained) to represent faithfully the circumstances present at the end of the reporting period and changes in circumstances during the reporting period. The entity shall account for changes in the transaction price in accordance with paragraphs 87–90.

Significant financing component

In determining the transaction price, the entity shall adjust the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provides the customer or the entity with a significant benefit of financing the transfer of goods or services to the customer. In those circumstances, the contract contains a significant financing component. A significant financing component may exist regardless of whether the promise of financing is explicitly stated in the contract or implied by the payment terms agreed to by the parties to the contract.
The objective, when adjusting the promised amount of consideration for a significant financing component, is for the entity to recognize revenue at an amount that reflects the price that the customer would have paid for the promised goods or services if the customer had paid for those goods or services cash at the time they (or as they) were transferred to the customer (that is, the cash selling price). The entity shall consider all relevant facts and circumstances in assessing whether a contract contains a financing component and whether that financing component is significant to the contract, including both of the following:
(a) the difference, if any, between the amount of promised consideration and the cash selling price of the promised goods or services; and (b) the combined effect of both of the following:
(i) the expected length of time between when the entity transfers the promised goods or services to the customer and when the customer pays for those goods or services; and (ii) the prevailing interest rates in the relevant market.
Notwithstanding the assessment in paragraph 61, a contract with a customer would not have a significant financing component if any of the following factors exist:
(a) the customer paid for the goods or services in advance and the timing of the transfer of those goods or services is at the discretion of the customer; (b) a substantial amount of the promised consideration is variable and the amount or timing of that consideration varies on the occurrence or non-occurrence of a future event that is not substantially within the control of the customer or the entity (for example, if the consideration consists of sales-based royalties); (c) the difference between the promised consideration and the cash selling price of the good or service (as described in paragraph 61) arises for reasons other than the provision of finance to the customer or the entity, and that difference between those amounts is proportional to the reason for the difference. For example, the payment terms might provide the entity or the customer with protection from the other party failing to adequately perform some or all of its obligations under the contract.
(Eliminated).
To achieve the objective in paragraph 61, when adjusting the promised amount of consideration for a significant financing component, the entity shall use the discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception. That rate would reflect the credit characteristics of the party receiving financing in the contract, as well as any collateral or security provided by the customer or the entity, including assets transferred in the contract. The entity may be able to determine that rate by identifying the rate that discounts the nominal amount of the promised consideration to the cash selling price that the customer would have paid for the goods or services when (or as) they were transferred to the customer. After contract inception, the entity shall not update the discount rate to reflect changes in interest rates or other circumstances (such as a change in the assessment of the customer’s credit risk).
The entity shall present the effects of financing (interest revenue or interest expense) separately from revenue from contracts with customers in the statement of comprehensive income. Interest revenue or interest expense shall be recognized only to the extent that a contract asset (or receivable) or a contract liability is recognized in accounting for the contract with the customer.

Non-cash consideration

To determine the transaction price for a contract in which the customer has promised consideration in a form other than cash, the entity shall measure the non-cash consideration (or promise of non-cash consideration) at fair value.
If the entity cannot reasonably estimate the fair value of the non-cash consideration, the entity shall measure the consideration indirectly by reference to the standalone selling price of the goods or services promised to the customer (or class of customers) in exchange for the consideration.
The fair value of the non-cash consideration may vary because of the form of the consideration (for example, the change in the price of the share that the entity has the right to receive from the customer). If the fair value of the non-cash consideration promised by the customer varies for reasons other than just the form of the consideration (for example, the fair value may vary because of the entity’s performance), the entity shall apply the requirements of paragraphs 56–58.
If the customer promises to provide goods or services (for example, materials, equipment, or labour) to the entity to facilitate the entity’s performance of the contract, the entity shall assess whether it obtains control of those goods or services received. If so, the entity shall account for the goods or services received from the customer as non-cash consideration.

Consideration payable to a customer

Consideration payable to a customer includes cash amounts that an entity pays or expects to pay to the customer (or to other entities that purchase goods or services from the customer). Consideration payable to a customer also includes credit or other items (for example, a coupon or voucher) that can be applied against amounts owed to the entity (or to other entities that purchase goods or services from the customer). The entity shall account for consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue, unless the payment to the customer is in exchange for a distinct good or service (as described in paragraphs 26–30) that the customer transfers to the entity. If consideration payable to a customer includes a variable amount, the entity shall estimate the transaction price (including the assessment of whether an estimate of variable consideration is constrained), in accordance with paragraphs 50–58.
If the consideration payable to a customer is for a distinct good or service from the customer, then the entity shall account for the purchase of the good or service in the same way that it accounts for other purchases from suppliers. If the amount of consideration payable to the customer exceeds the fair value of the distinct good or service that the entity receives from the customer, then the entity shall account for the excess as a reduction of the transaction price. If the entity cannot reasonably estimate the fair value of the good or service received from the customer, the entity shall account for the entire amount of the consideration payable to the customer as a reduction of the transaction price.
Consequently, if the consideration payable to a customer is accounted for as a reduction of the transaction price, the entity shall recognize the reduction of revenue when (or as) the later of the following events occurs:
(a) when the entity recognizes revenue for the transfer of the related goods or services to the customer; and (b) when the entity pays or promises to pay consideration to the customer (even if the payment is contingent on a future event). That promise may be inferred from the entity’s customary business practices.

Allocation of the transaction price to performance obligations

The objective, when allocating the transaction price, is for the entity to allocate the transaction price to each performance obligation (or distinct good or service) in an amount that reflects the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer.
To achieve that objective, the entity shall allocate the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis, in accordance with paragraphs 76–80, except as specified in paragraphs 81–83 (for the allocation of discounts) and paragraphs 84–86 (for the allocation of consideration that includes variable amounts).
Paragraphs 76–86 shall not apply if the contract has only one performance obligation. However, paragraphs 84–86 may apply if the entity promises to transfer a series of distinct goods or services that is identified as a single performance obligation in accordance with paragraph 22(b) and the promised consideration includes variable amounts.

Allocation based on standalone selling price

To allocate the transaction price to each performance obligation on a relative standalone selling price basis, the entity shall determine the standalone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and shall allocate the transaction price proportionately to those standalone selling prices.
The standalone selling price is the price at which the entity would sell a promised good or service separately to the customer. The best evidence of a standalone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. The price stated in the contract or the list price of the good or service may be (but shall not be presumed to be) the standalone selling price of that good or service.

If a standalone selling price is not directly observable, the entity shall estimate the standalone selling price by using a method that maximizes the use of observable inputs. In estimating the standalone selling price, the entity shall consider all information (including market conditions, entity-specific factors, and information about the customer or class of customer) that is reasonably available to the entity. In doing so, the entity shall maximize the use of observable inputs and shall apply estimation methods consistently for similar goods or services and circumstances.
Appropriate methods for estimating the standalone selling price of a good or service include, but are not limited to, the following:
(a) adjusted market assessment approach – the entity could evaluate the market in which it sells goods or services and estimate the price that the customer in that market would be willing to pay for those goods or services. That approach might also include referring to prices from the entity’s competitors for similar goods or services and adjusting those prices as necessary to reflect the entity’s costs and margins; (b) expected cost plus a margin approach – the entity could forecast its expected costs in satisfying a performance obligation and then add an appropriate margin for that good or service; (c) residual approach – the entity could estimate the standalone selling price by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract. However, the entity may use a residual approach to estimate, in accordance with paragraph 78, the standalone selling price of a good or service only if one of the following criteria is met:
(i) the entity sells the same good or service to different customers (at or around the same time) for a broad range of amounts (that is, the standalone selling price is highly variable because a representative standalone selling price cannot be discerned from past transactions or other observable evidence); or (ii) the entity has not yet established a price for that good or service and the good or service has not been sold previously on a standalone basis (that is, the standalone selling price is uncertain).
A combination of methods may need to be used to estimate the standalone selling prices of the goods or services promised in the contract if two or more of those goods or services have highly variable or uncertain standalone selling prices. For example, the entity might use a residual approach to estimate the total standalone selling price for those goods or services promised with highly variable or uncertain standalone selling prices and then use another method to estimate the standalone selling prices of the individual goods or services relative to that total estimated standalone selling price determined by the residual approach. When the entity uses a combination of methods to estimate the standalone selling price of each good or service promised in the contract, the entity shall assess whether the allocation of the transaction price by those estimated standalone selling prices is consistent with the objective of paragraph 73 and the requirements for estimating standalone selling prices in paragraph 78.

Allocation of discounts

The customer receives a discount for purchasing a group of goods or services if the sum of the individual selling prices of those goods or services promised in the contract exceeds the consideration promised in the contract. Unless the entity has observable evidence, in accordance with item 82, that the entire discount relates only to one or more of the performance obligations of the contract, but not to all, the entity must allocate the discount proportionally to all performance obligations of the contract. The proportional allocation of the discount in these circumstances is a consequence of the entity’s allocation of the transaction price to each performance obligation based on the individual selling prices of the underlying distinct goods or services.
The entity must allocate the entire discount to one or more of the performance obligations of the contract, but not to all, if all of the following criteria are met:
(a) the entity regularly sells each distinct good or service (or each group of distinct goods or services) from the contract individually; (b) the entity also regularly sells individually a group (or groups) of other of those distinct goods or services at a discount relative to the individual selling prices of the goods or services in each group; and (c) the discount attributable to each group of goods or services described in item 82(b) is substantially the same as the contract discount, and the analysis of the goods or services of each group provides observable evidence of the performance obligation (or performance obligations) to which the entire contract discount belongs.
If the entire discount is allocated to one or more performance obligations of the contract, in accordance with item 82, the entity must allocate the discount before using the residual approach to estimate the individual selling price of the good or service in accordance with item 79(c).

Allocation of variable consideration

The variable consideration promised in the contract may be attributable to the entire contract or to a specific part of the contract, such as any of the following:
(a) one or more of the performance obligations of the contract (for example, a bonus may depend on the entity’s transfer of a promised good or service within the specified timeframe), but not to all; or (b) one or more of the distinct goods or services promised, but not all, in a series of distinct goods or services that are part of a single performance obligation in accordance with item 22(b) (for example, the consideration promised for the second year of a two-year cleaning services contract will increase based on variations in the specified inflation index).
The entity must allocate a variable amount (and subsequent changes in that amount) entirely to the performance obligation or to the distinct good or service that is part of a single performance obligation in accordance with item 22(b), if both of the following criteria are met:
(a) the terms of the variable payment refer specifically to the entity’s efforts to satisfy the performance obligation or transfer the distinct good or service (the specific outcome of satisfying the performance obligation or transferring the distinct good or service); and

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 (b) the allocation of the entire variable amount of consideration to the performance obligation or to the distinct good or service is consistent with the allocation objective of item 73 when considering all performance obligations and payment terms of the contract.

The allocation requirements of items 73 to 83 must be applied to allocate the remaining transaction price that does not meet the criteria of item 85.

Changes in the transaction price

After the contract begins, the transaction price may change for various reasons, including the resolution of uncertain events or other changes in circumstances that alter the value of the consideration to which the entity expects to be entitled in exchange for the promised goods or services.
The entity must allocate any subsequent changes in the transaction price to the contract’s performance obligations in the same manner as at the contract’s inception. Consequently, the entity must not reallocate the transaction price to reflect changes in individual selling prices after the contract begins. Amounts allocated to satisfied performance obligations must be recognized as revenue, or as a reduction of revenue, in the period in which the transaction price changes.
The entity must allocate the change in the price of the entire transaction to one or more of the performance obligations of distinct goods or services promised, but not to all, in a series that is part of a single performance obligation, in accordance with item 22(b), only if the criteria of item 85 regarding the allocation of variable consideration are met.
The entity must account for the change in the transaction price resulting from the modification of the contract in accordance with items 18 to 21. However, for the change in the transaction price that occurs after the modification of the contract, the entity must apply items 87 to 89 to allocate the change in the transaction price in any of the following ways that are applicable:
(a) the entity must allocate the change in the transaction price to the performance obligations identified in the contract before the modification if, and to the extent that, the change in the transaction price is attributable to the value of the variable consideration promised before the modification and the modification is accounted for in accordance with item 21(a); (b) in other cases where the modification has not been accounted for as a separate contract, in accordance with item 20, the entity must allocate the change in the transaction price to the performance obligations of the modified contract (i.e., the performance obligations that were unsatisfied or partially satisfied immediately after the modification).

Contract costs

Costs to obtain a contract

The entity must recognize as an asset the incremental costs to obtain a contract with a customer, if the entity expects to recover those costs.

Incremental costs to obtain a contract are the costs that the entity incurs to obtain the contract with the customer that it would not have incurred if the contract had not been obtained (for example, sales commissions).
Costs to obtain the contract, which are incurred regardless of whether the contract is obtained, must be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer, regardless of whether the contract is obtained.
As a practical expedient, the entity may recognize the incremental costs to obtain a contract as an expense when incurred, if the amortization period of the asset that the entity would otherwise recognize is one year or less.

Costs to fulfill a contract

If the costs incurred in performing the contract with the customer are not within the scope of another pronouncement (for example, CPC 16 – Inventories, CPC 27 – Property, Plant and Equipment, or CPC 04 – Intangible Assets), the entity must recognize an asset from the costs incurred to fulfill the contract, only if those costs meet all of the following criteria:
(a) the costs relate directly to the contract or to a specific contract that the entity can specifically identify (for example, costs related to services to be provided according to an existing contract renewal or costs to design the asset to be transferred, according to a specific contract that has not yet been approved); (b) the costs generate or increase resources of the entity that will be used to satisfy (or to continue to satisfy) performance obligations in the future; and (c) the costs are expected to be recovered.
For costs incurred in performing a contract with a customer that are within the scope of another pronouncement, the entity must account for those costs in accordance with those other pronouncements.
Costs that relate directly to the contract (or to a specific contract) include any of the following:
(a) direct labor (for example, wages and salaries of employees who provide the services promised directly to the customer); (b) direct materials (for example, supplies used in providing the services promised to the customer); (c) allocations of costs that relate directly to the contract or to contract activities (for example, costs of management and supervision of the contract, insurance, and depreciation of tools, equipment, and right-of-use assets used in performing the contract); (d) costs that are explicitly chargeable to the customer according to the contract; and (e) other costs that are incurred only because the entity has entered into the contract (for example, payments to subcontractors).

The entity must recognize the following costs as an expense when incurred:
(a) general and administrative costs (unless these costs are explicitly chargeable to the customer according to the contract, in which case the entity must evaluate these costs in accordance with item 97); (b) costs related to losses of materials, labor, or other resources to fulfill the contract that were not reflected in the contract price; (c) costs that relate to performance obligations satisfied (or performance obligations partially satisfied) of the contract (i.e., costs that relate to past performance); and (d) costs with respect to which the entity cannot distinguish whether they relate to unsatisfied performance obligations or to satisfied performance obligations (or partially satisfied performance obligations).

Amortization and impairment

The asset recognized, in accordance with item 91 or 95, must be amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. The asset may relate to goods or services to be transferred according to a specific contract (as described in item 95(a)).
The entity must update the amortization to reflect a significant change in the expected timing by the entity of the transfer to the customer of the goods or services to which the asset relates. This change must be accounted for as a change in accounting estimate in accordance with CPC 23.
The entity must recognize an impairment loss in profit or loss to the extent that the carrying amount of the asset recognized, in accordance with item 91 or 95, exceeds:
(a) the remaining amount of consideration that the entity expects to receive in exchange for the goods or services to which the asset relates; less (b) the costs that relate directly to the provision of those goods or services and that have not been recognized as an expense (see item 97).
For purposes of applying item 101 to determine the amount of consideration that the entity expects to receive, the entity must use the principles for determining the transaction price (except with respect to the requirements of items 56 to 58 regarding the restriction of estimates of variable consideration) and must adjust that value to reflect the effects of the customer’s credit risk.
Before the entity recognizes an impairment loss for an asset recognized in accordance with item 91 or with item 95, the entity must recognize any impairment loss for assets related to the contract that are recognized in accordance with another pronouncement (for example, CPC 16, CPC 27, and CPC 04). After applying the impairment test of item 101, the entity must include the resulting carrying amount of the asset recognized in accordance with item 91 or with item 95 in the carrying amount of the cash-generating unit to which it belongs for purposes of applying CPC 01 – Impairment of Assets to that cash-generating unit.

The entity must recognize in profit or loss the reversal of all or part of the impairment loss recognized previously, in accordance with item 101, when the conditions for impairment no longer exist or have improved. The increase in the carrying amount of the asset must not exceed the value that would have been determined (net of amortization), if no impairment loss had been recognized previously.

Presentation

When either party to the contract has completed performance, the entity must present the contract on the balance sheet as a contract asset or contract liability, depending on the relationship between the performance by the entity and the payment by the customer. The entity must present separately as receivables any unconditional rights to consideration.
If the customer pays the consideration or the entity has a right to the value of the consideration that is unconditional (i.e., receivable), before the entity transfers the good or service to the customer, the entity must present the contract as a contract liability when the payment is made or the payment is due (whichever occurs earlier). A contract liability is the entity’s obligation to transfer goods or services to the customer, with respect to which the entity has received consideration from the customer or the value of the consideration is due by the customer.
If the entity completes performance by transferring goods or services to the customer before the customer pays the consideration, or before the payment is due, the entity must present the contract as a contract asset, excluding any amounts presented as receivables. A contract asset is the entity’s right to consideration in exchange for goods or services that the entity has transferred to the customer. The entity must evaluate a contract asset for impairment in accordance with CPC 48. The impairment of a contract asset must be measured, presented, and disclosed in the same manner as a financial asset that is within the scope of CPC 48 (see also item 113(b)).
Receivable is the entity’s right to consideration that is unconditional. The right to consideration is considered unconditional if only the passage of time is required before the payment of that consideration is due. For example, the entity must recognize the receivable if it has a present right to payment even if that amount may be subject to refund in the future. The entity must account for the receivable in accordance with CPC 48. At the time of initial recognition of the receivable arising from a contract with a customer, any difference, between the measurement of the receivable in accordance with CPC 48 and the corresponding amount of revenue recognized, if the first value is greater than the second value, must be presented as an expense (for example, impairment loss).
This pronouncement uses the terms “contract asset” and “contract liability,” but does not prohibit the entity from using alternative descriptions on the balance sheet for these items. If the entity uses an alternative description for a contract asset, the entity must provide sufficient information so that the users of the financial statements can differentiate between receivables and contract assets.

Disclosure

The objective of the disclosure requirements is that the entity discloses sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. To achieve this objective, the entity must disclose qualitative and quantitative information about all of the following items:
(a) its contracts with customers (see items 113 to 122); (b) significant judgments and changes in judgments made in applying this pronouncement to those contracts (see items 123 to 126); and (c) any assets recognized from costs to obtain or fulfill a contract with a customer in accordance with item 91 or with item 95 (see items 127 and 128).
The entity must consider the level of detail necessary to achieve the disclosure objective and how much emphasis should be given to each of the various requirements. The entity must aggregate or disaggregate disclosures so that material information is not obscured, either by including a large amount of insignificant detail or by aggregating items that have substantially different characteristics.
The entity does not need to disclose information in accordance with this pronouncement if it has provided the information in accordance with another pronouncement.

112A. The disclosure of revenue in the income statement must be made as conceptualized in this pronouncement. However, the entity must use other internal control accounts, such as “Taxable Gross Revenue,” for tax and other purposes. The reconciliation between the values recorded for tax purposes and those evidenced as revenue for disclosure purposes in accordance with this pronouncement must be evidenced in the notes to the financial statements.

Contract with customer

The entity must disclose all of the following values for the reporting period unless those values are presented separately in the statement of comprehensive income in accordance with other pronouncements:
(a) revenues recognized from contracts with customers, which the entity discloses separately from its other sources of revenues; and (b) any impairment losses recognized (in accordance with CPC 48) on any receivables or contract assets arising from the entity’s contracts with customers, which the entity must disclose separately from the impairment losses of other contracts.

Disaggregation of revenue

The entity must disaggregate revenues recognized from contracts with customers into categories that describe how the nature, amount, timing, and uncertainty of revenues from cash flows are affected by economic factors. The entity must apply the guidance of items B87 to B89 when selecting the categories to be used to disaggregate revenues.

In addition, the entity must disclose sufficient information to enable users of financial statements to understand the relationship between the disaggregated revenue disclosure (in accordance with item 114) and information about revenues that are disclosed for each reportable segment if the entity applies CPC 22 – Segment Reporting.

Contract balance

The entity must disclose all of the following items:
(a) beginning and ending balances of receivables, contract assets, and contract liabilities arising from contracts with customers, if not otherwise presented or disclosed separately; (b) revenues recognized in the reporting period that were included in the contract liability balance at the beginning of the period; and (c) revenues recognized in the reporting period arising from performance obligations satisfied (or partially satisfied) in prior periods (for example, changes in the transaction price).
The entity must explain how the timing of satisfaction of its performance obligations (see item 119(a)) relates to the usual timing of payment (see item 119(b)) and the effect that these factors have on the balances of contract assets and contract liabilities. The explanation provided may use qualitative information.
The entity must provide an explanation of significant changes in the balances of contract assets and contract liabilities during the reporting period. The explanation must include qualitative and quantitative information. Examples of changes in the entity’s contract asset and contract liability balances include any of the following items:
(a) changes due to business combinations;
(b) cumulative revenue adjustments that affect the contract asset or the corresponding contract liability, including adjustments resulting from the change in the measure of progress, the change in the estimate of the transaction price (including any changes in the assessment of whether the estimate of variable consideration is restricted), or contract modification; (c) impairment of contract assets; (d) change in the timeframe for the right to consideration to become unconditional (i.e., for the contract asset to be reclassified as a receivable); and (e) change in the timeframe for the performance obligation to be satisfied (i.e., for the recognition of revenues from contract liabilities).

Performance obligation

The entity must disclose information about its performance obligations in contracts with customers, including the description of all of the following items:
(a) when the entity normally satisfies its performance obligations (for example, upon shipment, upon delivery, as services are provided, or upon completion of services), including when performance obligations are satisfied according to billing but not delivery (bill-and-hold);

(b) significant payment terms (for example, whether payment is normally due, whether the contract has a significant financing component, whether the consideration amount is variable, and whether the estimate of variable consideration is normally constrained in accordance with paragraphs 56 to 58); (c) the nature of the goods or services that the entity has promised to transfer, highlighting any performance obligations to arrange for another party to transfer goods or services (that is, whether the entity is acting as an agent); (d) refund obligations, restitution obligations, and other similar obligations; and (e) types of guarantees and related obligations.

Transaction price allocated to remaining performance obligations

The entity shall disclose the following information about its remaining performance obligations:
(a) the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period; and (b) an explanation of when the entity expects to recognize as revenue the amount disclosed in accordance with paragraph 120(a), for which the entity shall disclose it in one of the following ways:
(i) on a quantitative basis, using the time bands that would be most appropriate for the duration of the remaining performance obligations; or (ii) using qualitative information.
As a practical expedient, the entity need not disclose the information in paragraph 120 for a performance obligation if either of the following conditions is met:
(a) the performance obligation is part of a contract that has an original expected duration of one year or less; or (b) the entity recognizes revenue from the satisfaction of the performance obligation in accordance with paragraph B16.
The entity shall explain qualitatively whether it is applying the practical expedient in paragraph 121 and whether any consideration from contracts with customers that is not included in the transaction price is therefore not included in the information disclosed in accordance with paragraph 120. For example, the estimate of the transaction price should not include any estimated amounts of variable consideration that are constrained (see paragraphs 56 to 58).

Significant judgments in applying this pronouncement

The entity shall disclose the judgments, and changes in the judgments, made in applying this pronouncement that significantly affect the determination of the amount and timing of revenue from contracts with customers. In particular, the entity shall explain the judgments and changes in the judgments, used to determine both of the following information:
(a) timing of satisfaction of performance obligations (see paragraphs 124 and 125); and (b) transaction price and amounts allocated to performance obligations (see paragraph 126).

Determination of the timing of satisfaction of performance obligation

For performance obligations that the entity satisfies over time, the entity shall disclose both of the following information:
(a) methods used to recognize revenue (for example, description of output methods or input methods used and how those methods are applied); and (b) explanation of why the methods used provide a faithful depiction of the transfer of goods or services.
For performance obligations satisfied at a point in time, the entity shall disclose the significant judgments made in evaluating when the customer obtains control of the promised goods or services.

Determination of the transaction price and amounts allocated to performance obligations

The entity shall disclose information about the methods, information, and assumptions used for all of the following:
(a) determining the transaction price, which includes, among other things, estimating variable consideration, adjusting the consideration to reflect the effects of the time value of money, and measuring non-monetary consideration; (b) evaluating whether the estimate of variable consideration is constrained; (c) allocating the transaction price, including estimating stand-alone selling prices of promised goods or services and allocating discounts and variable consideration to the specific part of the contract (if applicable); and (d) measuring refund obligations, restitution obligations, and other similar obligations.

Assets recognized from costs to obtain or fulfill a contract with a customer

The entity shall describe both of the following information:
(a) judgments made in determining the value of costs incurred to obtain or fulfill a contract with a customer (in accordance with paragraph 91 or paragraph 95); and (b) method used to determine amortization for each reporting period.
The entity shall disclose all of the following information:
(a) closing balances of assets recognized from costs incurred to obtain or fulfill a contract with a customer (in accordance with paragraph 91 or paragraph 95), by major category of asset (for example, costs to obtain contracts with customers, pre-contract costs, and setup costs); and (b) amortization amount and any impairment losses recognized in the reporting period.

Practical expedients

If the entity chooses to use the practical expedient in paragraph 94 (on incremental costs of obtaining a contract), the entity shall disclose that fact.

Appendix A – Definition of terms

This appendix is an integral part of the pronouncement.

Contract asset – The entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, future performance by the entity).

Customer – A party that has contracted with the entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.

Contract – An agreement between two or more parties that creates enforceable rights and obligations.

Performance obligation – A promise in a contract with a customer to transfer to the customer:
(a) a good or service (or a bundle of goods or services) that is distinct; or (b) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

Contract liability – The entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.

Transaction price (for a contract with a customer) – The amount of consideration to which the entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Stand-alone selling price (of a good or service) – The price at which the entity would sell a promised good or service separately to a customer.

Revenue – An increase in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in an increase in equity, and which are not resulting from contributions from equity participants.

Appendix B – Application guidance

This appendix is an integral part of the pronouncement. It describes the application of paragraphs 1 to 129 and has the same authority as the other parts of the pronouncement.

B1. This application guidance is organized in the following categories:
(a) performance obligation satisfied over time (paragraphs B2 to B13); (b) methods to measure progress towards complete satisfaction of the performance obligation (paragraphs B14 to B19); (c) sale with a right of return (paragraphs B20 to B27); (d) warranty (paragraphs B28 to B33); (e) principal versus agent considerations (paragraphs B34 to B38); (f) customer options for additional goods or services (paragraphs B39 to B43); (g) customer’s unexercised rights (paragraphs B44 to B47); (h) non-refundable upfront fees (and some related costs) (paragraphs B48 to B51); (i) licensing (paragraphs B52 to B63); (j) repurchase agreements (paragraphs B64 to B76); (k) consignment arrangements (paragraphs B77 and B78); (l) bill-and-hold arrangements (paragraphs B79 to B82); (m) customer acceptance (paragraphs B83 to B86); and (n) disaggregated revenue disclosure (paragraphs B87 to B89).

Performance obligation satisfied over time

B2. In accordance with paragraph 35, a performance obligation is satisfied over time if one or more of the following criteria are met:
(a) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs (see paragraphs B3 and B4); (b) the entity’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced (see paragraph B5); or (c) the entity’s performance does not create an asset with an alternative use to the entity (see paragraphs B6 to B8) and the entity has an enforceable right to payment for performance completed to date (see paragraphs B9 to B13).

Simultaneous receipt and consumption of the benefits of performance by the customer (paragraph 35(a))

B3. For some types of performance obligations, the assessment of whether the customer receives the benefits of the entity’s performance as the entity performs and simultaneously consumes those benefits as they are received is straightforward. Examples include routine or recurring services (such as cleaning services), in which the simultaneous receipt and consumption by the customer of the benefits of the entity’s performance can be readily identified.

B4. For other types of performance obligations, the entity may not be able to identify readily whether the customer receives and consumes simultaneously the benefits of the entity’s performance as the entity performs. In those circumstances, the performance obligation is satisfied over time if the entity determines that another entity would not need to substantially reperform the work that the entity has performed to date and that other entity would not have to perform the remaining performance obligation to the customer. In determining whether another entity would not need to substantially reperform the work that the entity has performed to date, the entity shall make both of the following assumptions:
(a) disregard potential contractual restrictions or practical limitations that would otherwise prevent the entity from transferring the remaining performance obligation to another entity; and (b) presume that another entity performing the remainder of the performance obligation would not have the benefit of any asset that is currently controlled by the entity and that would remain under the control of the entity if the performance obligation were transferred to another entity.

Customer controls the asset as it is created or enhanced (paragraph 35(b))

B5. In determining whether the customer controls an asset as it is created or enhanced in accordance with paragraph 35(b), the entity shall apply the control requirements in paragraphs 31 to 34 and 38. The asset that is being created or enhanced (for example, work-in-progress asset) can be tangible or intangible.

Performance by the entity does not create an asset with an alternative use (paragraph 35(c))

B6. In assessing whether the asset has an alternative use to the entity in accordance with paragraph 36, the entity shall consider the effects of contractual restrictions and practical limitations on the entity’s ability to readily direct that asset to another use, such as selling it to a different customer. The possibility that the contract with the customer will be terminated is not a relevant factor in assessing whether the entity is able to readily direct the asset to another use.

B7. A contractual restriction on the entity’s ability to direct the asset to another use must be substantive for the asset not to have an alternative use to the entity. A contractual restriction is substantive if the customer could enforce its rights to the promised asset if the entity seeks to direct the asset to another use. Conversely, a contractual restriction is not substantive if, for example, the asset is widely interchangeable with other assets that the entity can transfer to another customer without breaking the contract and without incurring significant costs that otherwise would not have been incurred in relation to that contract.

B8. A practical limitation on the entity’s ability to direct the asset to another use exists if the entity would incur significant economic losses to direct the asset to another use. Significant economic loss can arise because the entity would incur significant costs to rework the asset or would be able to sell the asset only at a significant loss. For example, the entity may be practically limited from redirecting assets that have design specifications that are unique to the customer or that are located in remote areas.

Right to payment for performance completed to date (paragraph 35(c))

B9. In accordance with paragraph 37, the entity has a right to payment for performance completed to date if the entity has a right to an amount that at least compensates the entity for its performance completed to date if the customer or another party terminates the contract for reasons other than the entity’s failure to perform as promised. The amount that would compensate the entity for its performance completed to date would be an amount that approximates the selling price of the goods or services transferred to date by the entity (for example, recovery of the costs incurred by the entity in satisfying the performance obligation plus a reasonable profit margin) rather than compensation for only the entity’s potential loss of profit if the contract were terminated. Compensation for a reasonable profit margin need not be equivalent to the profit margin that the entity expects if the contract were fulfilled as promised, but the entity must have a right to compensation for any of the following amounts:
(a) a proportion of the expected profit margin on the contract that reasonably reflects the extent of the entity’s performance under the contract prior to termination by the customer (or another party); or (b) a reasonable return on the entity’s cost of capital for similar contracts (or the entity’s usual operating margin for similar contracts), if the specific margin on the contract is greater than the return that the entity normally generates from similar contracts.

B10. The entity’s right to payment for performance completed to date need not be an unconditional present right to payment. In many cases, the entity has an unconditional right to payment only as specified in the payment terms or upon complete satisfaction of the performance obligation. In evaluating whether it has a right to payment for performance completed to date, the entity shall consider whether it would have an enforceable right to demand or retain payment for performance completed to date if the contract were terminated before completion for reasons other than the entity’s failure to perform as promised.

B11. In some contracts, the customer may have the right to terminate the contract only at specified times during the contract term or the customer may have no right to terminate the contract. If the customer acts to terminate the contract without having the right to terminate the contract at that time (including when the customer fails to fulfill its obligations as promised), the contract (or other laws) may give the entity the right to continue to transfer to the customer the goods or services promised in the contract and to require the customer to pay the promised consideration in exchange for those goods or services. In those circumstances, the entity has a right to payment for performance completed to date because the entity has the right to continue to perform its obligations under the contract and to require the customer to perform its obligations (which includes payment of the promised consideration).

B12. In evaluating the existence and enforceability of the right to payment for performance completed to date, the entity shall consider the contractual terms as well as any legislation or legal precedent that may supplement or override those contractual terms. This includes evaluating whether:
(a) legislation, administrative practice, or legal precedent gives the entity the right to payment for performance to date, even if that right is not specified in the contract with the customer; (b) relevant legal precedents indicate that similar rights to payment for performance completed to date in similar contracts would not have legally binding effect; or (c) the entity’s usual business practice of choosing not to enforce the right to payment results in the right being unenforceable in that legal environment. However, notwithstanding the fact that the entity may choose to waive its right to payment in similar contracts, the entity will continue to have a right to payment at that date if, in the contract with the customer, its right to payment for performance to date remains enforceable.

B13. The payment schedule specified in the contract does not necessarily indicate whether the entity has an enforceable right to payment for performance completed to date. Although the payment schedule in the contract specifies the timing and amount of consideration to be paid by the customer, the payment schedule may not necessarily provide evidence of the entity’s right to payment for performance completed to date. This is because, for example, the contract may specify that the consideration received from the customer is refundable for reasons other than the entity’s failure to perform as promised in the contract.

Methods to measure progress towards complete satisfaction of the performance obligation

B14. The methods that can be used to measure the entity’s progress towards complete satisfaction of the performance obligation satisfied over time, in accordance with paragraphs 35 to 37, include the following:
(a) output methods (see paragraphs B15 to B17); and (b) input methods (see paragraphs B18 and B19).

Output methods

B15. Output methods recognize revenue based on direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract. Output methods include methods such as surveys of performance completed to date, appraisals of results achieved, milestones reached, time elapsed, and units produced or units delivered. When the entity evaluates whether to apply an output method to measure its progress, it shall consider whether the output selected faithfully depicts the entity’s performance towards complete satisfaction of the performance obligation. An output method does not provide a faithful depiction of the entity’s performance if the output selected fails to measure some of the goods or services for which control has been transferred to the customer. For example, output methods based on units produced or units delivered do not faithfully depict the entity’s performance in satisfying the performance obligation if, at the end of the reporting period, the entity’s performance has produced work in progress or finished goods controlled by the customer that are not included in the output measurement.

B16. As a practical expedient, if the entity has a right to consideration from the customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date (for example, a service contract in which the entity charges a fixed amount for each hour of service provided), the entity may recognize revenue in the amount to which the entity has a right to invoice.

B17. The disadvantages of output methods are that the outputs used to measure progress may not be directly observable and the information required to apply them may not be

Input methods
B18. Input methods recognize revenue based on the entity’s efforts or inputs toward satisfying the performance obligation (for example, resources consumed, labor hours expended, costs incurred, time elapsed, or machine hours used), relative to the total expected inputs for satisfying that performance obligation. If the entity’s efforts or inputs are expended evenly over the entire performance period, it may be appropriate for the entity to recognize revenue using the straight-line method.

B19. A shortcoming of input methods is that there may not be a direct relationship between the entity’s inputs and the transfer of control of goods and services to the customer. Therefore, the entity must exclude from the input method the effects of any inputs that, in accordance with the objective of measuring progress in paragraph 39, do not describe the entity’s performance in transferring control of goods or services to the customer. For example, when using a cost-based input method, an adjustment to the measurement of progress may be required in the following circumstances:
(a) when the incurred cost does not contribute to the entity’s progress toward satisfying the performance obligation. For example, the entity should not recognize revenue based on costs attributable to significant inefficiencies in the entity’s performance that are not reflected in the contract price (for example, costs of unexpected excess waste of materials, labor, or other resources that were incurred to satisfy the performance obligation); (b) when the incurred cost is not proportional to the entity’s progress toward satisfying the performance obligation. In these circumstances, the best description of the entity’s performance may be to adjust the input method to recognize revenue only to the extent of that incurred cost. For example, a faithful depiction of the entity’s performance may be to recognize revenue at an amount equivalent to the cost of the goods used to satisfy the performance obligation if the entity expects that, at contract inception, all of the following conditions will be met:
(i) the good is not distinct;
(ii) the customer is expected to obtain control of the good significantly before receiving the services related to the good; (iii) the cost of the good transferred is significant in relation to the total expected costs to completely satisfy the performance obligation; and (iv) the entity obtains the good from a third party and is not directly involved in the design and manufacture of the good (but the entity is acting as a principal in accordance with paragraphs B34 to B38).

Sales with a right of return
B20. In some contracts, the entity transfers control of the product to the customer and also grants the customer the right to return the product for various reasons (such as dissatisfaction with the product) and receive any combination of the following:
(a) a full or partial refund of any consideration paid; (b) a credit that can be applied against amounts owed, or that will be owed, to the entity; and

B21. To account for the transfer of products with a right of return (and for some services that are provided and subject to refund), the entity must recognize all of the following:
(a) revenue for the products transferred at the amount of consideration to which the entity expects to be entitled (therefore, revenue would not be recognized for products that are expected to be returned); (b) a refund liability; and (c) an asset (and a corresponding adjustment to cost of sales) for its right to recover products from customers when settling the refund liability.

B22. The entity’s promise to accept a returned product during the return period should not be accounted for as an additional performance obligation to the obligation to provide the refund.

B23. The entity must apply the requirements of paragraphs 47 to 72 (including the requirements for constraints on estimates of variable consideration in paragraphs 56 to 58) to determine the amount of consideration to which the entity expects to be entitled (that is, excluding products that are expected to be returned). For any amounts received (or receivable) to which the entity does not expect to be entitled, it should not recognize revenue when transferring products to customers, but should recognize the amounts received (or receivable) as a refund liability.

Subsequently, at the end of each reporting period, the entity must update its assessment of amounts to which it expects to be entitled in exchange for the transferred products and must make the corresponding change in the transaction price and, therefore, in the amount of revenue recognized.

B24. The entity must update the measurement of the refund liability at the end of each reporting period for changes in expectations about the value of refunds. The entity must recognize corresponding adjustments as revenue (or reductions of revenue).

B25. The asset recognized relating to the entity’s right to recover products from a customer in settlement of a refund liability must be initially measured, with reference to the previous carrying amount of the product (for example, inventory) less any expected costs to recover those products (including potential reductions in value to the entity of the returned products). At the end of each reporting period, the entity must update the measurement of the asset resulting from changes in expectations about products to be returned. The entity must present the asset separately from the refund liability.

B26. Exchanges by customers of a product for another of the same type, quality, condition, and price (for example, color or size for another) are not considered returns for the purposes of applying this pronouncement.

B27. Contracts in which the customer can return a defective product in exchange for a non-defective product must be evaluated in accordance with the guidance on warranties in paragraphs B28 to B33.

COMMISSION OF SECURITIES AND EXCHANGE COMMISSION Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 Warranties B28. It is common for the entity to provide (in accordance with the contract, law, or usual commercial practices of the entity) a warranty regarding the sale of a product (whether goods or services). The nature of the warranty can vary significantly between sectors and contracts. Some warranties provide the customer with a certain assurance that the related product will function as the parties intend because it complies with the agreed specifications. Other warranties provide the customer with additional service beyond the assurance that the product complies with the agreed specifications.

B29. If the customer has the option to purchase the warranty separately (for example, because the warranty is priced or negotiated separately), the warranty must be a distinct service because the entity commits to providing the service to the customer in addition to the product that has the functionality described in the contract. In these circumstances, the entity must account for the promised warranty as a performance obligation in accordance with paragraphs 22 to 30 and must allocate a portion of the transaction price to that performance obligation in accordance with paragraphs 73 to 86.

B30. If the customer does not have the option to purchase the warranty separately, the entity must account for the warranty in accordance with CPC 25 – Provisions, Contingent Liabilities and Contingent Assets, unless the promised warranty, or part of it, provides the customer with additional service beyond the assurance that the product complies with the agreed specifications.

B31. When assessing whether the warranty provides the customer with additional service beyond the assurance that the product complies with the agreed specifications, the entity must consider factors such as:
(a) whether the warranty is required by law – if the entity is required by law to provide the warranty, the existence of that law indicates that the promised warranty is not a performance obligation because these requirements typically exist to protect customers from the risk of acquiring defective products; (b) the extent of the warranty coverage period – the longer the coverage period, the greater the likelihood that the promised warranty is a performance obligation because there is a greater likelihood of providing additional service beyond the assurance that the product complies with the agreed specifications; (c) the nature of the tasks that the entity commits to perform – if it is necessary for the entity to perform specific tasks to provide the assurance that the product complies with the agreed specifications (for example, a service for returning defective products), then these tasks will likely not result in a performance obligation.

B32. If the warranty, or part of it, provides the customer with additional service beyond the assurance that the product complies with the agreed specifications, the promised service is a performance obligation. Therefore, the entity must allocate the transaction price to the product and the service. If the entity promises both the normal warranty and the extended warranty, but cannot account for them reasonably separately, the entity must account for both warranties together as a single performance obligation.

B33. The law that requires the entity to pay compensation if its products cause injury or damage does not result in a performance obligation. For example, a manufacturer may sell products in a jurisdiction where the law holds the manufacturer liable for any damages (for example, to personal property) that may be caused by the consumer using the product for its intended use.

Principal and agent considerations
B34. When another party is involved in the supply of goods or services to the customer, the entity must determine whether the nature of its promise is a performance obligation to provide the specific goods or services itself (that is, the entity is a principal) or to arrange for those goods or services to be provided by another party (that is, the entity is an agent). The entity must determine whether it is the principal or the agent for each specific good or service promised to the customer. The specific good or service is a distinct good or service (or a distinct set of goods or services) to be provided to the customer (see paragraphs 27 to 30). If the contract with the customer includes more than one specified good or service, the entity may be the principal for some specified goods or services and the agent for others.

B34A. To determine the nature of its commitment (as described in paragraph B34), the entity must:
(a) identify the specified products or services to be provided to the customer (which, for example, may be the right to a good or service to be provided by another party (see paragraph 26); and (b) assess whether it controls (as described in paragraph 33) each good or service before the specified good or service is transferred to the customer.

B35. The entity is a principal if it controls the specified good or service before the good or service is transferred to the customer. However, the entity does not necessarily control the specified good if the entity obtains legal title to that good only shortly before legal title is transferred to the customer. An entity that is a principal may satisfy the performance obligation to provide the specified good or service itself, or it may engage another party (for example, a subcontractor) to satisfy the entirety or part of the performance obligation on its behalf.

B35A. When another party is involved in the supply of goods or services to the customer, the entity, which is the principal, obtains control of any of the following:
(a) a good or other asset from the other party that it then transfers to the customer; (b) a right to the service to be performed by the other party, which gives the entity the ability to direct that party to provide the service to the customer on behalf of the entity; (c) a good or service from the other party that is then combined with other goods or services in the supply of the specified good or service to the customer. For example, if the entity provides significant integration services of goods or services (see paragraph 29(a)) provided by another party within the specified good or service for which the customer contracted, the entity controls the specified good or service before the good or service is transferred to the customer. This occurs because the entity first obtains control of the inputs to the specified good or service (which includes goods or services from other parties) and directs their use to create the combined output, which is the specified good or service.

B36. The entity is an agent if the entity’s performance obligation is to arrange for the provision of specified goods or services by another party. The entity, which is the agent, does not control the specified good or service provided by the other party before the good or service is transferred to the customer. When (or as) the entity, which is an agent, satisfies the performance obligation, it must recognize revenue equivalent to the amount of any fee or commission to which it expects to be entitled for arranging for the other party to provide its specified goods or services, which will be provided by that other party. The entity’s fee or commission may be the net amount of consideration that the entity retains after paying the other party the consideration received for the goods or services to be provided by that other party.

B37. Indicators that the entity controls the specified good or service before it is transferred to the customer (and is, therefore, the principal (see paragraph B35)) include, but are not limited to, the following:
(a) the entity is the primary obligor to fulfill the commitment to provide the specified good or service. This typically includes responsibility for the acceptability of the specified good or service (for example, primary responsibility for the good or service, meeting the customer’s specifications). If the entity is the primary obligor to fulfill the commitment to provide the specified good or service, this may indicate that the other party, involved in the supply of the specified good or service, is acting on behalf of the entity; (b) the entity has inventory risk before the specified good or service has been transferred to the customer; or after the transfer of control to the customer (for example, if the customer has a right of return). For example, if the entity obtains or commits to obtaining the specified good or service before obtaining the contract with the customer, which may indicate that the entity has the ability to direct the use of (and obtain substantially all of the remaining benefits) the good or service before it is transferred to the customer; (c) the entity has discretion in establishing the price for the specified good or service. Establishing the price that the customer pays for the specified good or service may indicate that the entity has the ability to direct the use of that good or service and obtain substantially all of the remaining benefits. However, an agent may have freedom to set prices in some cases. For example, an agent may have some flexibility in setting prices in order to generate additional revenue from its service of arranging goods or services to be provided by other parties for customers.

B37A. The indicators in paragraph B37 may be more or less relevant to the assessment of control, depending on the nature of the specified good or service and the terms and conditions of the contract. Furthermore, different indicators may provide more convincing evidence in different contracts.

B38. If another entity assumes the entity’s performance obligations and contractual rights in the contract in such a way that the entity is no longer obligated to satisfy the performance obligation to transfer the specified good or service to the customer (that is, the entity is no longer acting as a principal), the entity should not recognize revenue for that performance obligation.

Customer options for additional goods or services B39. Customer options to acquire goods or services for free or at a discount occur in many forms, including sales incentives, customer premium credits (or points), contract renewal options, or other discounts on future goods or services.

B40. If, in the contract, the entity grants the customer the option to acquire additional goods or services, that option will result in a performance obligation in the contract only if the option provides a material right to the customer that it would not receive without entering into that contract (for example, a discount that is incremental to the range of discounts typically granted for those goods or services to that class of customer in that market or geographic area). If the option provides a material right to the customer, the customer is, in fact, paying the entity in advance for future goods or services, and the entity must recognize revenue when those future goods or services are transferred or when the option expires.

B41. If the customer has the option to acquire an additional good or service at a price that would reflect the standalone selling price of that good or service, that option will not provide the customer with a material right even if the option can be exercised only upon entering into a prior contract. In these cases, the entity that made the marketing offer must account for this transaction, in accordance with this pronouncement, only when the customer exercises the option to purchase additional goods or services.

B42. Paragraph 74 requires the entity to allocate the transaction price to performance obligations based on the standalone selling price. If the standalone selling price for the customer’s option to acquire additional goods or services is not directly observable, the entity must estimate its value. This estimate must reflect the discount that the customer will obtain by exercising the option, adjusted for both of the following:
(a) any discount that the customer receives without exercising the option; and (b) the probability that the option will be exercised.

B43. If the customer has a material right to acquire future goods or services and those goods or services are similar to the original goods or services in the contract and are provided in accordance with the terms of the original contract, then the entity may, as a practical expedient to estimate the standalone selling price of the option, allocate the transaction price to the optional goods or services with reference to the goods or services that are expected to be provided and the corresponding expected consideration. Typically, these types of options are for contract renewals.

Customer’s unused rights
B44. In accordance with paragraph 106, upon receipt of a customer prepayment, the entity must recognize a contract liability at the amount of the prepayment for its performance obligation to transfer, or to be prepared to transfer, goods or services in the future. The entity must derecognize this contract liability (and must recognize revenue) when it transfers those goods or services and, therefore, satisfies its performance obligation.

B45. Non-refundable prepayment by a customer to the entity gives the customer the right to receive a good or service in the future (and obliges the entity to be prepared to transfer the good or service). However, customers may not exercise all of their contractual rights. These unexercised rights are frequently referred to as breakage.

B46. If the entity expects to be entitled to the breakage value in a contract liability, the entity must recognize the expected breakage value as revenue proportionally to the pattern of rights exercised by the customer. If the entity does not expect to be entitled to the breakage value, the entity must recognize the expected breakage value as revenue when the likelihood of the customer exercising its remaining rights becomes remote. To determine whether the entity expects to be entitled to the breakage value, the entity must consider the requirements in paragraphs 56 to 58 regarding constraints on estimates of variable consideration.

B47. The entity must recognize a liability (and not revenue) for any consideration received attributable to unexercised customer rights for which the entity is required to remit them to another party, for example, a governmental entity, in accordance with applicable laws on unclaimed property.

Non-refundable initial fees (and some related costs)

B48. In some contracts, the entity charges the customer a non-refundable initial fee at or near the inception of the contract. Examples include membership initiation fees in gym contracts, activation fees in telecommunications contracts, installation fees in some service contracts, and initial fees in some supply contracts.

B49. To identify performance obligations in these contracts, the entity must assess whether the fees relate to the transfer of a promised good or service. In many cases, even if the non-refundable initial fee relates to the activity that the entity is obliged to undertake at or near the inception of the contract to fulfill the contract, that activity does not result in the transfer of the promised good or service to the customer (see paragraph 25). Instead, the initial fee is an advance payment for future goods or services and, therefore, must be recognized as revenue when those goods or services are provided. The period for revenue recognition must extend beyond the initial contract period if the entity grants the customer an option to renew the contract and that option provides the customer with a material right, as described in paragraph B40.

B50. If the non-refundable initial fee relates to a good or service, the entity must assess whether it should account for the good or service as a separate performance obligation in accordance with paragraphs 22 to 30.

B51. The entity may charge a non-refundable fee partly as compensation for costs incurred in setting up the contract (or other administrative tasks, as described in paragraph 25). If these setup activities do not satisfy a performance obligation, the entity must disregard those activities (and their respective costs) when measuring progress in accordance with paragraph B19. This is because the costs of setup activities do not describe the transfer of services to the customer. The entity must assess whether the costs incurred in setting up the contract resulted in an asset that must be recognized in accordance with paragraph 95.

Licensing

B52. A license establishes the customer’s rights to the entity’s intellectual property. Intellectual property licenses may include, but are not limited to, licenses of any of the following:
(a) software and technology;
(b) films, music, and other forms of media and entertainment; (c) franchises; and (d) patents, trademarks, and copyrights.

B53. In addition to the promise to grant a license (or licenses) to the customer, the entity may also commit to transfer other goods or services to the customer. These promises may be explicitly stated in the contract or implicit in the entity’s usual business practices, published policies, or specific statements (see paragraph 24). As with other types of contracts, when the contract with the customer includes a promise to grant a license (or licenses) in addition to other promised goods or services, the entity must apply paragraphs 22 to 30 to identify each of the performance obligations in the contract.

B54. If the promise to grant a license is not distinct from other goods or services promised in the contract, in accordance with paragraphs 26 to 30, the entity must account for the promise to grant the license and other promised goods or services together as a single performance obligation. Examples of licenses that are not distinct from other goods or services promised in the contract include the following:
(a) a license that forms a component of a tangible good and is integral to the functionality of the good; and (b) a license from which the customer can benefit only in conjunction with a related service (such as an online service provided by the entity that allows the customer, upon granting the license, to access the content).

B55. If the license is not distinct, the entity must apply paragraphs 31 to 38 to determine whether the performance obligation (which includes the promised license) is a performance obligation that is satisfied over time or satisfied at a specific point in time.

B56. If the promise to grant a license is distinct from the other goods or services promised in the contract and, therefore, the promise to grant the license is a separate performance obligation, the entity must determine whether the license is transferred to the customer at a specific point in time or over time. In determining this, the entity must consider whether the nature of the entity’s promise in granting the license to the customer is to provide the customer with:
(a) a right to access the entity’s intellectual property that exists throughout the license period; or (b) a right to use the entity’s intellectual property that exists at a specific point in time when the license is granted.

Determination of the nature of the entity’s promise

B57. (Eliminated).

B58. The nature of the entity’s promise to grant a license is a commitment to provide a right to access the entity’s intellectual property if all of the following criteria are met:
(a) the contract requires, or the customer reasonably expects, that the entity will undertake activities that significantly affect the intellectual property to which the customer has rights (see paragraphs B59 and B59A); (b) the rights granted by the license expose the customer directly to any positive or negative effects of the entity’s activities, identified in paragraph B58(a); and (c) those activities do not result in the transfer of a good or service to the customer when they occur (see paragraph 25).

B59. Factors that may indicate that the customer could reasonably expect the entity to undertake activities that significantly affect the intellectual property include the entity’s usual business practices, published policies, or specific statements. Although not a determinative factor, the existence of shared economic interest (for example, sales-based royalties) between the entity and the customer regarding the intellectual property to which the customer has rights may also indicate that the customer could reasonably expect the entity to undertake those activities.

B59A. Entity activities significantly affect the intellectual property to which the customer has rights when:
(a) those activities are expected to significantly change the form (for example, design or content) or functionality (for example, ability to perform a function or task) of the intellectual property; or (b) the customer’s ability to benefit from the intellectual property is substantially derived from, or dependent on, those activities. For example, the benefit of a brand is often derived from, or dependent on, ongoing activities of the entity that support or maintain the value of the intellectual property.

Thus, if the intellectual property to which the customer has rights has significant standalone functionality, a substantial part of the benefit of that intellectual property is derived from that functionality. Consequently, the customer’s ability to benefit from the intellectual property is not significantly affected by the entity’s activities unless those activities significantly change its form or functionality. Types of intellectual property that often have significant standalone functionality include software, biological compounds or drug formulas, and complete media content (for example, films, television programs, and music recordings).

B60. If the criteria in paragraph B58 are met, the entity must account for the promise to grant a license as a performance obligation satisfied over time because the customer will simultaneously receive and consume the benefit of the entity providing access to its intellectual property as the performance occurs (see paragraph 35(a)). The entity must apply paragraphs 39 to 45 to choose an appropriate method to measure its progress toward complete satisfaction of that performance obligation to provide access to its intellectual property.

B61. If the criteria in paragraph B58 are not met, the nature of the entity’s promise is to provide the right to use the entity’s intellectual property as that intellectual property exists (in terms of form and functionality) at the specific point in time when the license is granted to the customer. This means that the customer can direct the use of the license at that specific point in time when the license is transferred to it and obtain substantially all of the remaining benefits of that license. The entity must account for the promise to provide the right to use the entity’s intellectual property as a performance obligation satisfied at a specific point in time. The entity must apply paragraph 38 to determine the specific point in time when the license must be transferred to the customer. However, revenue cannot be recognized for a license that provides the right to use the entity’s intellectual property before the beginning of the period during which the customer is able to use the license and benefit from it. For example, if the software license period begins before the entity provides (or otherwise makes available) to the customer the code that allows the customer to immediately use the software, the entity must not recognize revenue before that code has been provided (or otherwise made available) to the customer.

B62. The entity must disregard the following factors when determining whether the license provides a right to access the entity’s intellectual property or a right to use it:
(a) restrictions on time, geographic region, or use – these restrictions define the attributes of the promised license, rather than defining whether the entity satisfies its performance obligation at a specific point in time or over time; (b) guarantees provided by the entity that it holds a valid patent on intellectual property and that it will defend that patent against unauthorized use – the promise to defend the patent right is not a performance obligation because the act of defending the patent protects the value of the entity’s intellectual property assets and ensures that the license transferred meets the specifications of the license promised in the contract.

Sales-based or usage-based royalties

B63. Notwithstanding the requirements specified in paragraphs 56 to 59, the entity must recognize revenue for sales-based or usage-based royalties promised in exchange for a license of intellectual property only when (or as) the later of the following events occurs:
(a) the subsequent sale or usage; and
(b) the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated has been satisfied (or partially satisfied).

B63A. The requirement for a sales-based or usage-based royalty in paragraph B63 must be applied when the royalty refers only to the license of intellectual property or when the license of intellectual property is the predominant item to which the royalty refers (for example, a license of intellectual property may be the predominant item to which the royalty refers when the entity has a reasonable expectation that the customer will attribute significantly more value to the license than to the other goods or services to which the royalty relates).

B63B. When the requirement in paragraph B63A is met, sales-based or usage-based royalty revenue must be recognized in full, in accordance with paragraph B63. When the requirement in paragraph B63A is not met, the requirements regarding variable consideration, specified in paragraphs 50 to 59, must be applied to sales-based or usage-based royalties.

Repurchase agreement

B64. A repurchase agreement is a contract in which the entity sells an asset and also promises to repurchase the asset or has an option to repurchase it (whether in the same contract or in another contract). The repurchased asset may be the asset that was originally sold to the customer, an asset that is substantially the same as that asset, or another asset of which the asset that was originally sold is a component.

B65. Repurchase agreements generally take three forms:
(a) an obligation for the entity to repurchase the asset (a forward); (b) a right for the entity to repurchase the asset (a call option); and (c) an obligation for the entity to repurchase the asset at the customer’s request (a put option).

Call option or forward

B66. If the entity has an obligation or right to repurchase the asset (call option or forward), the customer does not obtain control of the asset because the customer is limited in its ability to direct the use of the asset and to obtain substantially all of the remaining benefits from that asset, even if the customer comes to have physical possession of the asset. Consequently, the entity must account for the contract in one of the following ways:
(a) as a lease in accordance with CPC 06, if the entity can or must repurchase the asset for an amount less than the original selling price of the asset, unless the contract is part of a sale and leaseback transaction. If the contract is part of a sale and leaseback transaction, the entity must continue to recognize the asset and must recognize a financial liability for any consideration received from the customer. The entity must account for the financial liability in accordance with CPC 48; or (b) as a financing arrangement, in accordance with paragraph B68, if the entity can or must repurchase the asset for an amount equal to or greater than the original selling price of the asset.

B67. When comparing the repurchase price with the selling price, the entity must consider the time value of money.

B68. If the repurchase agreement is a financing arrangement, the entity must continue to recognize the asset and must also recognize a financial liability for any consideration received from the customer. The entity must recognize the difference between the amount of consideration received from the customer and the amount of consideration to be paid to the customer as interest and, if applicable, as processing and retention costs (for example, insurance).

B69. If the option expires without being exercised, the entity must derecognize the liability and recognize revenue.

Put option

B70. If the entity has an obligation to repurchase the asset at the customer’s request (put option) at a price that is less than the original selling price of the asset, the entity must consider, at the inception of the contract, whether the customer has a significant economic incentive to exercise that right. The exercise of that right by the customer will result in the customer effectively paying consideration to the entity for the right to use the specific asset for a period of time. Therefore, if the customer has a significant economic incentive to exercise that right, the entity must account for the agreement as a lease in accordance with CPC 06, unless the contract is part of a sale and leaseback transaction. If the contract is part of a sale and leaseback transaction, the entity must continue to recognize the asset and must recognize a financial liability for any consideration received from the customer. The entity must account for the financial liability in accordance with CPC 48.

B71. To determine whether the customer has a significant economic incentive to exercise its right, the entity must consider various factors, including the relationship of the repurchase price to the expected market value of the asset at the date of repurchase and the time until the right expires. For example, if the repurchase price is expected to significantly exceed the market value of the asset, this may indicate that the customer has a significant economic incentive to exercise the put option.

B72. If the customer does not have a significant economic incentive to exercise its right at a price lower than the original selling price of the asset, the entity must account for the agreement as if it were a sale of goods with a right of return, as described in paragraphs B20 to B27.

B73. If the repurchase price of the asset is equal to or greater than the original selling price and is greater than the expected market value of the asset, the contract is, in fact, a financing arrangement and, therefore, must be accounted for, as described in paragraph B68.

B74. If the repurchase price of the asset is equal to or greater than the original selling price and is less than or equal to the expected market value of the asset, and the customer does not have a significant economic incentive to exercise its right, the entity must account for the agreement as if it were a sale of goods with a right of return, as described in paragraphs B20 to B27.

B75. When comparing the repurchase price with the selling price, the entity must consider the time value of money.

B76. If the option expires without being exercised, the entity must derecognize the liability and recognize revenue.

Consignment arrangements

B77. When the entity delivers the product to another party (such as a reseller or distributor) for sale to end customers, the entity must assess whether that other party obtained control of the product at that specific point in time. The product that was delivered to the other party may be held under a consignment contract if that other party did not obtain control of the product. Consequently, the entity must not recognize revenue upon delivery of the product to that other party if the delivered product is held on consignment.

B78. Indicators that a contract is a consignment contract include, without limitation, the following:
(a) the product is controlled by the entity until a specific event occurs, such as the sale of the product to the reseller's customer or until a specified period expires; (b) the entity is able to require the return of the product or to transfer the product to a third party (such as another reseller); and (c) the reseller does not have an unconditional obligation to pay for the product (although a deposit may be required).

Agreements of the "bill-and-hold" type
B79. A "bill-and-hold" agreement is a contract by which the entity invoices the product to the customer, but retains physical possession of the product until it is transferred to the customer at a specific time in the future. For example, the customer may request that the entity enter into this type of contract due to the customer's lack of available space to physically accommodate the product or due to delays in the customer's production schedule. B80. The entity must determine when its performance obligation to transfer the product is satisfied by assessing when the customer obtains control of that product (see item 38). For some contracts, control is considered transferred when the product is delivered to the customer's location or when the product is shipped, depending on the terms of the contract (including shipping and delivery terms). However, for some contracts, the customer may obtain control of the product even if that product remains in the physical possession of the entity. In that case, the customer has the ability to direct the use of the product, and to obtain substantially all of the remaining benefits from that product, even if it has decided not to exercise its right to take physical possession of that product. Consequently, in this situation, the entity does not control the product. Instead, the entity provides custody services of the asset to the customer. B81. In addition to applying the requirements of item 38 for the customer to obtain control of the product in a "bill-and-hold" agreement, all of the following criteria must be met:
(a) the reason for the "bill-and-hold" agreement must be substantive (for example, the customer requested the agreement); (b) the product must be identified separately as belonging to the customer; (c) at that time, the product must be ready for physical transfer to the customer; and (d) the entity cannot have the ability to use the product or to direct it to another customer. B82. If the entity recognizes revenue for the sale of the product on a "bill-and-hold" basis, the entity must consider whether it has remaining performance obligations (for example, for custody services), in accordance with items 22 to 30, for which the entity must allocate part of the transaction price in accordance with items 73 to 86.

Customer acceptance
B83. In accordance with item 38(e), customer acceptance of the asset may indicate that the customer has obtained control of the asset. Customer acceptance clauses allow the customer to cancel the contract or require the entity to take corrective measures if the good or service does not meet the agreed specifications. The entity must consider these clauses when assessing when the customer will obtain control of the good or service.

B84. If the entity can objectively determine that control of the good or service has been transferred to the customer in accordance with the specifications agreed in the contract, then customer acceptance is a formality that does not affect the entity's determination of when the customer obtained control of the good or service. For example, if the customer acceptance clause is based on meeting specified dimension and weight characteristics, the entity must be able to determine whether these criteria were met before receiving confirmation of the customer's acceptance. The entity's experience with contracts for similar goods or services may provide evidence that the good or service provided to the customer is in accordance with the specifications agreed in the contract. If revenue is recognized before customer acceptance, the entity must still consider whether there are any remaining performance obligations (for example, equipment installation) and assess whether it should account for them separately. B85. However, if the entity cannot objectively determine that the good or service provided to the customer is in accordance with the specifications agreed in the contract, then the entity should not be able to conclude that the customer has obtained control until the entity formally receives customer acceptance. This is because, in these circumstances, the entity cannot determine that the customer has the ability to direct the use of the good or service, or to obtain substantially all of the remaining benefits from that good or service. B86. If the entity delivers products to the customer for testing or evaluation purposes and the customer is not committed to paying any consideration until the end of the testing period, control of the product should not be considered transferred to the customer until the customer accepts the product or until the testing period expires.

Disaggregation of revenue disclosure
B87. Item 114 requires that the entity disaggregate revenue from contracts with customers into categories that describe how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Consequently, the extent to which the entity's revenue is disaggregated for the purposes of this disclosure depends on the facts and circumstances relating to the entity's contracts with customers. Some entities may need to use more than one type of category to meet the objective of item 114 to disaggregate revenue. Other entities may meet the objective using only one type of category to disaggregate revenue. B88. When selecting the type of category (or categories) to be used to disaggregate revenue, the entity must consider how information about the entity's revenue has been presented for other purposes, including the following:
(a) disclosures presented outside the financial statements (for example, in earnings releases, annual reports, or investor presentations); (b) information regularly reviewed by the principal operational decision-maker to assess the financial performance of operating segments; and (c) other information similar to the types of information identified in items B88(a) and (b) and that are used by the entity or users of the entity's financial statements to assess the financial performance of the entity or to make resource allocation decisions.

B89. Examples of categories that may be appropriate include, without limitation, the following:
(a) type of good or service (for example, major product lines); (b) geographic region (for example, country or region); (c) market or type of customer (for example, government and non-government customers); (d) type of contract (for example, fixed-price contracts and time-and-materials contracts); (e) contract duration (for example, short-term and long-term contracts); (f) timing of transfer of goods or services (for example, revenue from goods or services transferred to customers at a specific point in time and revenue from goods or services transferred over time); and (g) sales channels (for example, goods sold directly to customers and goods sold through intermediaries).

Appendix C – Effective date and transition
This appendix is an integral part of the pronouncement and has the same importance as the other parts of the pronouncement.

Effective date
C1. The effective date of this Pronouncement will be defined by the regulatory bodies that approve it, and for full compliance with international accounting standards, the entity must apply this Pronouncement for annual periods beginning on or after January 1, 2018.

Transition
C2. For the purposes of the transition requirements of items C3 to C8A:
(a) date of initial application is the beginning of the period of the financial statements in which the entity first applies this pronouncement; and (b) completed contract is a contract by which the entity has transferred all identified goods or services in accordance with CPC 17 – Construction Contracts, with CPC 30 – Revenues, and with their respective technical interpretations. C3. The entity must apply this pronouncement using one of the following methods:
(a) retrospectively, to each prior period presented, in accordance with CPC 23, subject to the practical expedients described in item C5; or (b) retrospectively, with the cumulative effect of the initial application of this pronouncement recognized at the date of initial application in accordance with items C7 and C8.
C4. Notwithstanding the requirements of item 28 of CPC 23, when this pronouncement is applied for the first time, the entity needs only to present the quantitative information required by item 28(f) of CPC 23 for the annual period immediately preceding the first annual period to which this pronouncement must be applied ("immediately preceding period") and only if the entity applies this pronouncement retrospectively in accordance with item C3(a). The entity may also present this information for the current period or for earlier comparative periods, but is not required to do so. C5. The entity may use one or more of the following practical expedients when applying this pronouncement retrospectively in accordance with item C3(a):
(a) for completed contracts, the entity is not required to restate contracts that:
(i) begin and end in the same annual financial reporting period; (ii) are completed contracts at the beginning of the first period presented; (b) for completed contracts that have variable consideration, the entity may use the transaction price at the date the contract was completed instead of estimating variable consideration amounts in the comparative reporting periods; (c) for contracts that were modified before the beginning of the first period presented, the entity is not required to retrospectively restate the contract to incorporate those changes to the contract, in accordance with items 20 and 21. Instead, the entity must reflect the aggregate effect of all modifications that occurred before the beginning of the first period presented when:
(i) identifying satisfied and unsatisfied performance obligations; (ii) determining the transaction price; and (iii) allocating the transaction price to satisfied and unsatisfied performance obligations; (d) for all reporting periods presented before the date of initial application, the entity is not required to disclose the amount of the transaction price allocated to remaining performance obligations and an explanation of when the entity expects to recognize that amount as revenue (see item 120). C6. For any of the practical expedients in item C5 that the entity uses, the entity must apply that expedient consistently to all contracts within all reporting periods presented. In addition, the entity must disclose all of the following information:
(a) the expedients that were used; and
(b) to the extent possible, a qualitative assessment of the estimated effect of applying each of these expedients.
C7. If the entity chooses to apply this pronouncement retrospectively in accordance with item C3(b), the entity must recognize the cumulative effect of initially applying this pronouncement as an adjustment to the opening balance of retained earnings (or another component of equity, as appropriate) of the annual reporting period that includes the date of initial application. Under this transition method, the entity may elect to apply this pronouncement retrospectively only to contracts that are not completed contracts at the date of initial application (for example, January 1, 2018 for an entity with a fiscal year ending on December 31). C7A. An entity that applies this pronouncement retrospectively in accordance with item C3(b) may also use the practical expedient described in item C5(c):
(a) for all contract modifications that occurred before the beginning of the earliest period presented; or (b) for all contract modifications that occurred before the date of initial application.
If the entity uses this practical expedient, the entity must apply the expedient consistently to all contracts and disclose the information required by item C6.
C8. For reporting periods that include the date of initial application, the entity must provide both of the following additional disclosures, if this pronouncement is applied retrospectively in accordance with item C3(b):
(a) the amount by which each line item in the financial statements is affected in the current financial reporting period by the application of this pronouncement compared to CPC 17, CPC 30, and their respective technical interpretations that were in effect before the change; and (b) an explanation of the reasons for significant changes identified in C8(a).
C9. (Eliminated).

Repeal of other pronouncements
C10. This pronouncement replaces the following pronouncements and technical interpretations:
(a) CPC 17 – Construction Contracts;
(b) CPC 30 – Revenues;
(c) Interpretation A – Customer Loyalty Programs, attached to CPC 30; (d) ICPC 02 – Real Estate Sector Construction Contract; (e) ICPC 11 – Receipt in Transfer of Assets from Customers; and (f) Interpretation B – Revenue – Exchange Transaction Involving Advertising Services, attached to CPC 30.

Lineage: No known changes

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