7.4.1 Significant financing component – meaning

In determining the transaction price, a promised amount of consideration is adjusted for the effects of the time value of money if the timing of payments agreed to by the parties to the contract provides the customer or the entity with a significant benefit of financing the transfer of goods or services to the customer. In such circumstances, the contract contains a significant financing component which may exist irrespective of whether the promise of financing is stated explicitly in the contract or implied by the payment terms agreed to by the parties to the contract. [IFRS 15:60]

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