In March 2020, the IFRS Interpretations Committee (IFRS IC) reached a final decision on the question of how to account for training costs incurred by an entity that are necessary to fulfil a performance obligation to a customer. These are costs incurred when the staff providing the service must first be trained, for example in specific technical aspects of customer equipment that will be used.
Keywords: Mazars, Thailand, IFRS, IFRS IC, IAS 38, IFRS 15
26 June 2020
In the Committee’s view, these costs are explicitly covered by IAS 38 on intangible assets, which states that they must be recognised as an expense when they are incurred. The IFRS IC also noted that IFRS 15 prohibits entities from capitalising the costs of fulfilling a contract where these are primarily within the scope of another standard that precludes their recognition as an asset.
Finally, the IFRS IC clarified that these costs are also immediately recognised as an expense when the contract explicitly permits the entity to charge them to the customer (as was the case in the fact pattern submitted to the Committee).