Direct sales with no contract
Our company produces detergents and sells directly to supermarkets for resale based on sales orders received (small, multiple orders).
We have no ‘contract’. Does IFRS 15 apply in this case since there is no contract?
Under IFRS 15 (paragraph 10), a contract can be written, oral or implied by entity’s customary business practices. Thus a contract is not necessarily written specific document signed by both parties.
Instead, it could well be the acceptance of seller’s terms and conditions by the customers.
So, if you enter a shop and buy new shoes, you accepted that shop’s terms and conditions, hence it is a contract for the purposes of application of IFRS 15 and that shop needs to apply IFRS 15 (if it follows IFRS).
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