Accounting, Reporting & Tax
Revenue Recognition in Shipping
Summary
Under IFRS 15, shipping revenue from customer contracts is recognised as performance obligations are satisfied.
Why this matters in ship finance
Voyage charter revenue, time-charter hire and contract of affreightment activity can have different accounting patterns and may involve lease elements.
The concept
Identify the relevant accounting model before recognition: some time-charter arrangements include a lease within IFRS 16, whereas service revenue may fall under IFRS 15.
How it is used in practice
Analyse voyage progress, contract modifications, demurrage, variable consideration, service completion and contract assets and liabilities.
Practical issues
No single percentage-of-completion shortcut covers all charters. Contract substance and applicable accounting standard determine timing.
How ShipFinance.ai uses this concept
Offer a contract-type decision tree with revenue and cash-collection schedules.
Key takeaways
- Determine whether IFRS 15 or IFRS 16 applies first.
- Service and lease elements can coexist in a charter.
- Revenue timing follows performance obligations and contract substance.