By Brigitte Schwartz

PSAK 72: REVENUE FROM CUSTOMER

CONTRACTS & TAX IMPLICATIONS

What new investors need to know

CONTENT
What we'll learn today

01. REVENUE 02. PSAK 72

03. TAX IMPLICATION
 PAGE O3

REVENUE
 REVENUE

Bases on ED PSAK 72, Revenue is income that arising during the normal activities of the entity.
Revenue can also be interpreted as a condition where the company obtains additional assets
which are usually in the form of cash or accounts receivable or a reduction in company
liabilities (unearned revenue) for the settlement of obligations from the company's normal
activities towards consumers so that it will increase company equity.
 REVENUE CONCEPTS
EARNINGS PROCESS REALIZATION PROCESS

Is a revenue process that occurs after the company

It is a concept based on the assumption that all
has completed production and managed to sell the
operational activities required by the company
products it produces.
which include production, marketing, billing, etc. in
order to achieve goals, will contribute to the final
result of revenue.
PSAK 72 - REVENUE FROM CUSTOMER
CONTRACTS

Adoption of IFRS 15 Revenue from Contracts with Customers

... SUPERSEDES THE PREVIOUS POCKET GUIDELINES, NAMELY:

PSAK 23: Revenue

PSAK 34: Construction Contract

PSAK 44: Accounting for Real Estate Development Activities

ISAK 10: Customer Loyalty Program

ISAK 21: Real Estate Construction Agreement

ISAK 27: Transfer of Assets from Customers

 OBJECTIVES
Establish principles regarding the nature, amount, timing, and the uncertainty of income and
cash flows arising from contracts with customers.

The key principle s of PSAK 72 is to:

• Recognizing revenue to represent the transfer of promised goods or services to customers
• Considering the terms of the contract and all relevant facts and circumstances
• For individual contracts and contract portfolios
 THE SCOPE
PSAK 72 is for all contracts with customers, except:
• Rental contract - PSAK 30 Lease
• Insurance contract - PSAK 62 Insurance Contract;
• Financial instruments - PSAK 71: Financial Instruments, PSAK 65: Consolidated Financial
Statements, PSAK 66: Joint Arrangements, PSAK 4: Separate Financial Statements and
PSAK 15: Investments in Associated Entities and Joint Ventures;
• Non-monetary exchanges between entities in the same line of business to facilitate
sales to customers or potential customers.
 RECOGNITION
Contract Identification
An entity records contracts with customers only when all of the following criteria are met:
• the parties to the contract have agreed to the contract (in writing, orally or in accordance
with common business practice) and are committed to carrying out their respective
obligations
• the entity can identify the rights of each party regarding the goods or services to be
transferred
• the entity can identify the term for payment for the goods or services to be transferred
• the contract has commercial substance
• it is probable that the entity will collect the consideration it will be entitled to in exchange
for the goods or services that will be transferred to the customer
 WHOLLY UNPERFORMED
NO CONTRACTS NOT FULFILLING THE CONTRACT
CONTRACT

There is no contract, if each party to

the contract has the right that can be
enforced unilaterally to terminate the
contract that is not fully implemented
(wholly unperformed contract) without
any compensation to the other party
An entity that receives consideration from
The contract is considered as this if both the customer when the criteria are not
of the following criteria are met: met will not recognise revenue until either:

• the entity has not transferred the

• the entity has no remaining
promised goods or services to the
performance obligations and
customer; and
substantially all the consideration is
• the entity has not received, and has not
received and non-refundable, or
been entitled to receive, any
• the contract is terminated and amounts
consideration in exchange for the
received are non-refundable.
promised goods or services
 RECOGNITION
Contract Combination
An entity combines two or more entered into contracts and accounts for these contracts as a
single contract if one or more of the following criteria are met:
• The contracts achieve a single commercial objective and are negotiated as a package.
• The price or performance of one contract influences the amount of consideration to be
paid in the other contract.
• The goods or services in the separate contracts represent a single performance
obligation.
 RECOGNITION
Contract Modifications

A contract modification is a change in the scope or price of a contract (or both) agreed to by
the parties to the contract.
An entity accounts for it as a separate contract if the following conditions are met:
• the scope of the contract increases because the addition of the promised goods or
services is distinct
• the contract price is increased by a consideration that reflects the entity's stand-alone
selling prices for additional promised goods or services and an appropriate adjustment
to the price to reflect the circumstances of the particular contract
Contract Modifications

If the contract modification is not recorded as a separate contract, the Entity records the promised
goods or services that have not been transferred at the date of the contract modification by:
• An entity accounts for contract modifications as if the contract modification were termination of the
existing contract and creates a new contract, if the remaining goods or services are of a
distinguishable nature from the goods or services transferred on or before the date of the contract
modification.
• An entity accounts for a modified contract as if it were part of an existing contract if the remaining
goods or services are indistinguishable and therefore form part of a single performance obligation
that is partially satisfied at the date of the contract modification.
 RECOGNITION
Identify Performance Obligations

A performance obligation is a promise to transfer a distinct good or service to a customer.

A good or service is distinct only if:
• the customer can benefit from the good or service either on its own or together with
other readily available resources (that is, the goods or services are capable of being
distinct); and
• the good or service is separately identifiable from other promises in the contract
Identify Performance Obligations

If the promised goods or services are indistinguishable, the entity combines the goods or services with
other promised goods or services until the entity identifies the package of goods or services as
distinguishable.

Promises in Contracts with Customers

• Contracts generally explicitly state the goods or services promised to be transferred to the
customer.
• The performance obligation is not limited to goods or services explicitly stated in the contract
 RECOGNITION
Completion of Performance Obligations
Performance Obligation Over Time
An entity transfers control of the goods or services over time and, therefore, also satisfies a
performance obligation and recognizes revenue over time, if one of the following criteria is
met;
• customers simultaneously receive and consume the benefits provided by the entity's
performance when the entity performs its performance obligations
• the entity's performance creates or enhances assets that the customer controls as assets
that are created or enhanced
• the entity's performance does not create an asset with an alternative use to the entity
and the entity has an enforceable right to payment for performance completed to date
Completion of Performance Obligations

Performance Obligation At a Point In Time

If the performance obligation is not satisfied over time, then the entity will settle the
performance obligation at a certain time.
To determine the specific time during which the customer obtains control of the promised
asset and the entity settles the performance obligation
 MEASUREMENT
Determine the Transaction Price

When determining the transaction price, an entity shall consider the effect of all of the
following:
• Variable rewards
• Variable reward barrier estimates
• The existence of a significant financing component in the contract
• Non-cash rewards, and
• Fees owed to customers
 MEASUREMENT
Allocating Transaction Prices Against Performance Obligations
The objective when allocating the transaction price is for the entity to allocate the
transaction price to each performance obligation (or distinguishable goods or services) in an
amount that represents the amount of consideration expected to be entitled to the entity in
exchange for transferring the promised goods or services to customers.
 MEASUREMENT
Changes in Transaction Prices
The entity allocates to the performance obligation in a subsequent change contract the
transaction price on the same basis at the inception of the contract.
The entity records the change in the transaction price as a result of the contract
modification. If a contract modification occurs, the entity allocates the change in transaction
price in one of the following ways:
• An entity allocates the change in the transaction price prior to the modification if, and to
the extent that the change in the transaction price is redistributed to the amount of the
variable consideration promised prior to the modification and the modification is
accounted for as termination of the contract.
• Modifications are recorded as a separate contract. The entity allocates the change in the
transaction price against the performance obligation under the modified contract
CONTRACT
COSTS
 INCREMENTAL COST OF CONTRACT
ACQUISITION

The entity recognizes an incremental cost of acquisition contracts with customers as an

asset if the entity estimates to recover those costs.

• The incremental costs of obtaining contracts are:

-costs incurred to obtain contracts with customers,
-will not occur if the contract has not been awarded (for example, a sales commission).

• Costs to obtain a contract that are incurred regardless of whether the contract was
awarded are recognized as an expense when incurred, unless these costs can be
explicitly assigned to the customer regardless of whether the contract was obtained.
 CONTRACT FULFILLMENT COSTS ARE
RECOGNIZED AS AN ASSET

If the costs incurred in fulfilling a contract with a customer are not within the scope of
another Statement, entity recognizes asassets for the costs incurredto fulfill the contract
only if the fee meets all of the following criteria:

• costs directly related to the contract or to anticipated contracts can be specifically

identified by the entity (for example, costs related to services provided in renewal of
an existing contract or costs of designing assets to be transferred under a specific
contract that have not yet been Approved);
• the cost of generating or increasing the entity's resources to be used in settling (or in
continuing to settle) future performance obligations; And
• costs are expected to be recovered.
 IMPAIRMENT AMORTIZATION
The assets recognized (deferred contract costs) are amortized on a systematic basis
consistent with the transfer to customers for related goods or services with assets.

• Assets may relate to goods or services transferred under specific anticipated

contracts.
• The entity updates the amortization to reflect significant changes

The entity recognizes an impairment loss in profit or loss if the carrying amount of the
recognized assets exceeds:
• the residual amount of consideration that the entity expects to receive in exchange
for goods or services related to the asset; reduced
• costs that are directly related to the provision of goods or services and which have not
been recognized as expenses
PRESENTATION
When either party to the contract has performed, the entity presents
the contract in the statement of financial position as:
• contract assets → (liability > consideration received), or
• contract liability → (liability < consideration received) depend on the
relationship between the entity's performance and customer payments.
• The entity presents an unconditional right to consideration separately as a
receivable.
DISCLOSURE
The objective of the disclosure requirements is for the entity to disclose
sufficient information to enable users of the financial statements to
understand the nature, amount, timing and uncertainty of revenues and cash
flows arising from contracts with customers. To achieve this objective, the
entity shall disclose qualitative and quantitative information about all of the
following:
• contracts with customers;
• significant judgments and changes in judgment, made in applying this
Standard to such contracts and;
• assets recognized from costs to obtain or fulfill contracts with customers.
 IMPAIRMENT AMORTIZATION

Contract with Customer

• Revenue Separation
• Contract Balance
• Performance Obligations
• Transaction Price Allocated to Remaining Performance Obligations

Significant Considerations in the Application of This Statement

• Determining Time for Completion of Performance Obligations
• Determine the transaction price and amount allocated to performance obligations

Assets Recognized from Costs of Obtaining or Fulfilling Contracts with Customers

 EFFECTIVE DATE

• Entities apply this Statement for the financial year period beginning on or after
January 1, 2020. Early application is permitted.
• If an entity applies this Statement earlier, it will disclose that fact.
 IMPACT OF STANDARD CHANGE

• The impact of changing standards is influenced by:

-Level of standard change 🡪 recognition, measurement, presentation or disclosure.
-Relevance of the standard to the transaction and presentation of the company's
financial statements
 IMPLICATIONS OF ACCOUNTING STANDARDS
The emergence of new assets or liabilities that were not previously recognized; examples of
usufructuary assets, biological assets, lease liabilities
• Influence some financial ratios → loan covenants
• Affect the value of equity → compliance with regulatory requirements

Changes in the value of assets or liabilities due to different measurement methods

• There are different ways to calculate the impairment of financial assets → change the
value of impairment → receivables change
• Load acknowledgment
System changes
• Calculations that require additional data so that changes to the accounting system are
needed

Changes in business processes or ways of doing business

• Revenue recognition → requirements that must be met → the contract agreement with
the customer changes; business practices change
• Business practices must pay attention to the implications in financial reporting
 PAGE 33

TAX IMPLICATIONS

based on the application of PSAK 72

 PAGE 34

TAX IMPLICATIONS

Provisions in the Law on General Provisions and Tax Procedures

Explanation of article 28 (Bookkeeping)

The implication is that if there are
paragraph 7: "...bookkeeping must be
carried out in a manner or system that is no special provisions in tax
commonly used in Indonesia, for example regulations, they will follow the
based on Financial Accounting Standards, provisions in financial accounting
unless the tax laws and regulations
standards.
stipulate otherwise.
SETTING CHANGES IN STANDARDS IN
TAXATION
• Tax regulations do not recognize the concept of restatement of financial statements.
• Changes in accounting policies sometimes have an impact on changes in previous year's profit
which have bigger or smaller tax implications in the past.
• In taxes, the term SPT correction is known, which usually occurs due to writing, calculation and
error in applying regulatory provisions.
• Tax regulations apply after they are stipulated → prospective application.
• Retroactive application of standards will be difficult to accept from a tax perspective.
 • RECOGNIZED REVENUE VALUE IS NOT THE SAME AS SALES
INVOICES, AND VAT INVOICES → NOT EQUAL VAT BASIS AND
SALES VALUE
• RETROACTIVE IMPLEMENTATION OF POLICY CHANGES,
TAX IMPLICATIONS RESULTING IN POTENTIAL FOR DOUBLE REVENUE
RECOGNITION:
OF PSAK 72 ⚬ REVENUE HAS BEEN RECOGNIZED WITH A PERCENTAGE OF
COMPLETION IN THE PREVIOUS THREE YEARS OF 70%,
ACCORDING TO PSAK 72 REVENUE IS RECOGNIZED IN 2020
AT 100%. ACCOUNTING CAN CORRECT THE PREVIOUS
YEAR'S RECOGNITION IN RETAINED EARNINGS OR LK
RESTATEMENTS, BUT TAXES DO NOT RECOGNIZE SPT
CORRECTIONS DUE TO PSAK CHANGES.
Thank you!