Under IFRS 15, what are the five steps for revenue recognition?

Under IFRS 15, revenue recognition follows a structured five-step process, which is critical for ensuring consistency and comparability in financial reporting. The correct option outlines this process in its entirety:

1. Identify the contract: The first step requires an entity to establish that a contract exists and meets certain criteria such as approval by the parties and the ability to identify rights and payment terms.

2. Identify performance obligations: This involves determining distinct goods or services promised within the contract. A performance obligation is fulfilled when the customer obtains control of the good or service.

3. Determine transaction price: The next step is to figure out the amount of consideration that the entity expects to receive in exchange for transferring the promised goods or services to the customer.

4. Allocate the transaction price: When a contract includes multiple performance obligations, the transaction price must be allocated to each performance obligation based on their relative standalone selling prices.

5. Recognize revenue: Finally, revenue is recognized when the entity satisfies a performance obligation, which means when control of the promised good or service is transferred to the customer.

This comprehensive approach ensures that revenue is recognized in a manner that reflects the transfer of control of the goods or services provided, aligning revenue