Costs to fulfil a contract (paragraphs 95-98) (paras. BC304-BC308)
BC304 The boards developed requirements for accounting for some costs to fulfil a contract. Those requirements were developed in response to concerns that the proposals in the Discussion Paper focused on how an entity should recognise revenue in a contract without considering how the entity should account for the costs to fulfil a contract. Some respondents, particularly those from the construction industry, said that requirements for profit margin recognition are as important as requirements for revenue recognition. Other respondents, mainly preparers who apply US GAAP, were concerned about the withdrawal of requirements for costs that were developed specifically for their own industries.
BC305 The cost requirements in IFRS 15 are intended to achieve the following:
(a) fill the gap arising from the withdrawal of previous revenue Standards - IFRS 15 will result in the withdrawal of some requirements for contract costs, in particular, the previous requirements for accounting for construction contracts.