Revenue over time or at a point in time?

The three IFRS 15 criteria that make a performance obligation satisfied over time, the signs that control passed at a point in time, and worked examples.

By Achekam · 11 October 2026 · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya

A security company invoices its clients monthly for guarding. A software developer takes a deposit, builds a bespoke stock system over several months and invoices the balance on go-live. A furniture wholesaler delivers to retailers and invoices on dispatch. Each recognises revenue somewhere, and in two of these three cases the invoice date probably tells you very little about when.

IFRS 15 sorts every performance obligation into one of two groups: those satisfied over time, and those satisfied at a point in time. The sorting decides whether revenue builds up across the year-end or lands on a single date, which is often the difference between a correct figure and a material misstatement for a project-based client. This article sets out the test and applies it.

Control as the deciding idea

Under IFRS 15, revenue is recognised when a performance obligation is satisfied by transferring a promised good or service to a customer, which is when the customer obtains control of that good or service. Everything in this article is a way of answering one question: when does the customer get control?

The IFRS Foundation notes the usual pattern. A performance obligation may be satisfied at a point in time, typically for promises to transfer goods, or over time, typically for promises to transfer services. "Typically" is doing real work in that sentence. Some goods contracts are satisfied over time, and some service contracts are not, which is why the criteria below have to be applied rather than assumed.

The three over-time criteria

ACCA lists the three IFRS 15 criteria under which a performance obligation is satisfied over time. Meeting any one of them is enough:

1. The customer simultaneously receives and consumes the benefits as the entity performs. Guarding, cleaning and routine maintenance fit here: each day's service is used up by the customer on the day it is given.
2. The entity's performance creates or enhances an asset that the customer controls. A builder extending a client's existing factory on the client's land is the standard example; each day's work adds to an asset the customer already owns.
3. The performance creates no asset with an alternative use to the entity, and the entity has an enforceable right to payment for work completed to date. Both halves are needed. A bespoke system built to one customer's specifications may have no alternative use; whether there is an enforceable right to payment for work done so far depends on the contract.

If none of the three is met, ACCA explains, the obligation is satisfied at a point in time.

Point-in-time indicators: title, possession, right to payment

For obligations satisfied at a point in time, the question is when control passes. ACCA explains that indicators that control has passed include a present right to payment, the customer having legal title, and the entity having transferred physical possession of the asset.

These indicators usually move together, but not always. Goods held by the supplier on a bill-and-hold arrangement, goods on consignment with a retailer, and goods shipped on terms that pass title only on arrival all need a closer look at the contract. Where the indicators point to different dates, weigh them together and record why the chosen date is the one on which the customer obtained control.

Examples: a maintenance contract, custom software, goods on delivery

The two software rows show how much depends on the contract wording. Read the clause on termination and payment before deciding. A developer with an enforceable right to be paid for work done if the customer cancels is in a different position from one who is paid only if the system goes live.

Measuring progress and wording the policy

For obligations satisfied over time, the IFRS Foundation states that an entity selects an appropriate measure of progress to determine how much revenue to recognise as the obligation is satisfied. For a small client the choice is usually between measures based on what has been done, such as milestones reached or units delivered, and measures based on effort, such as hours worked or costs incurred against the total expected. Choose the measure that best reflects the transfer of the service, document it, and apply it consistently from contract to contract. Construction work has particular considerations, covered in construction contracts after IAS 11.

In Achekam, the Studio builds a draft set of statements from a mapped trial balance, with every figure calculated in code. It presents the revenue the trial balance holds; it does not decide when control passed. So the timing analysis above has to be reflected in the trial balance, including any amounts earned but not yet invoiced or invoiced but not yet earned, before the draft is relied on.

The Studio's standard accounting policy wording is based on IFRS for SMEs and is labelled for review before issue, and staff can write the client's own policy. For a client with both kinds of revenue, the policy should name each stream, say whether it is recognised over time or at a point in time, and for over-time streams state the measure of progress. The wider walk through the standard's steps is in applying IFRS 15's five steps.

ACCA's technical article revisiting IFRS 15 explains the five-step model for recognising revenue, including the transaction price. For each project-based client this year, list the contracts open at year end and record, for each, which criterion it meets or which indicator fixed the date.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.