paragraphs B64-B76

BC422 When developing the requirements for control, the boards considered how an entity should apply the requirements to contracts in which the entity sells an asset and also enters into a repurchase agreement (either in the same contract or in another contract).

BC423 The boards observed that repurchase agreements generally come in three forms - forwards, call options and put options. However, the boards decided that an arrangement in which an entity subsequently decides to repurchase a good after transferring control of that good to a customer would not constitute a repurchase agreement as described in paragraph B64 of IFRS 15. This is because the entity's subsequent decision to repurchase a good without reference to any pre-existing contractual right does not affect the customer's ability to direct the use of, and obtain substantially all of the remaining benefits from, the good upon initial transfer. In other words, the customer is not obliged to resell that good to the entity as a result of the initial contract. The boards observed that in those cases, the entity should, however, consider whether the customer obtained control of the good initially and may need to consider the requirements for principal versus agent in paragraphs B34-B38 of IFRS 15.

A forward or a call option