Background: The entertainment industry encompasses a wide range of activities, from live performances to film production and broadcasting. Navigating the complexities of revenue recognition is crucial for financial reporting accuracy. Let's explore a case involving a concert production company to understand how IFRS 15 principles are applied.

Scenario: XYZ Concert Productions organizes and hosts live music concerts. They sell tickets to fans and also generate revenue through sponsorships and merchandise sales during events. The company follows IFRS 15 guidelines for revenue recognition.

Step 1: Identification of the Contract XYZ Concert Productions sells tickets to individual customers. Each ticket purchase constitutes a separate contract between the company and the customer.

Step 2: Identification of the Performance Obligations The primary performance obligation is providing access to the live concert. Additional obligations include ensuring a safe and enjoyable experience for attendees.

Step 3: Determination of the Transaction Price The transaction price is derived from ticket sales, sponsorships, and merchandise. Discounts and refunds are factored into the calculation.

Step 4: Allocation of the Transaction Price to Performance Obligations The transaction price is allocated to each performance obligation based on their standalone selling prices.

Step 5: Recognition of Revenue When (or as) the Entity Satisfies a Performance Obligation Revenue is recognized when control of the concert access is transferred to the customer typically at the time of the live performance.

Case Study Question: Based on the scenario presented, at what point does XYZ Concert Productions recognize revenue under IFRS 15?

A) At the end of the concert tour

B) When tickets are sold

C) At the time of the live performance

D) Upon receiving sponsorship agreements

Choose the correct option and provide a brief explanation of your choice.