The growth of digital commerce has transformed the way businesses conduct transactions. Various arrangements, including prepaid orders, third-party marketplaces, delivery services, discounts and vouchers, and return rights, can affect how businesses record revenue in financial statements.
One of the most common questions is when exactly revenue should be recognized. Is it when an order is placed, when the customer makes a payment, while the goods are on delivery, or only when the customer receives them?
Effective January 1, 2020, Indonesia adopted the International Financial Reporting Standards (IFRS) 15 as Statement of Financial Accounting Standards (Pernyataan Standar Akuntansi Keuangan/PSAK) 72. Under PSAK 72, revenue recognition is not determined simply by when cash is received. Instead, it depends on when a company satisfies its performance obligations and transfers control of the goods or services to the customer.
Five-Step Revenue Recognition Model
PSAK 72 establishes a five-step model for recognizing revenue. The first step is to identify the contract with the customer. In an online sale, a contract is generally established when the customer completes the checkout process and makes payment or agrees to a cash-on-delivery (COD) arrangement.
A contract qualifies for revenue recognition when the parties' rights and obligations are identifiable, the payment terms are clear, the arrangement has commercial substance, and the company is likely to collect the consideration it is entitled to. In e-commerce transactions, the platform-generated order number generally serves as contract documentation.
The second step is to identify the contract's performance obligations. Each distinct good or service represents a separate performance obligation. For instance, an online order may contain two separate performance obligations if it includes two distinct components. i.e., physical goods purchased and a separately and significantly charged delivery service.
The next steps are to determine the transaction price and allocate it to each performance obligation. At this stage, companies must consider factors such as discounts, promotional vouchers, and other incentives. The following table illustrates the example:
For example, suppose a customer pays IDR 100,000 for three units under a “buy two, get one free” promotion. If all three units are distinct performance obligations with the same standalone selling price, allocate the transaction price equally across all three units. It would be inappropriate to recognize two units at IDR 50,000 each and the third at IDR 0, as it was advertised as free. A small difference of IDR 1 for the third unit may arise due to rounding.
The final step is to recognize revenue when the relevant performance obligation has been satisfied. For the sale of goods, recognition generally occurs when control of the goods passes to the customer. When a courier delivers goods under a free-on-board destination arrangement, recognize revenue when the customer receives the goods. On the other hand, if the customer collects the goods directly from a warehouse or store, recognize revenue when the goods are handed over to the customer.
Challenges in Practice
Applying PSAK 72 to e-commerce transactions can present several practical challenges. Receiving payment before delivering goods does not mean revenue can be recognized. As long as the company remains obligated to deliver the goods, the amount received is recorded as a liability.
Marketplace transactions also require companies to determine whether they are acting as a principal or an intermediary. In practice, the distinction affects both revenue presentation and applicable tax treatment. A marketplace that merely provides an ecosystem connecting sellers and customers is not the party responsible for issuing tax invoices and reporting value-added tax (VAT). These obligations remain with the marketplace seller as the owner and supplier of the goods.
The accounting treatment of promotional programs also depends on who bears the discount cost. A discount provided directly by the seller reduces the amount of revenue recognized. By contrast, if the marketplace bears the discount and the amount ultimately received by the seller is unaffected, the seller’s revenue is generally recognized at the full amount.
Similar principles apply to service businesses. Issuing an invoice or receiving payment does not necessarily mean that revenue has been earned. If the service has not yet been provided, the payment remains unearned revenue. Conversely, where a service has already been provided but has not yet been billed, the company may recognize accrued revenue, subject to the applicable requirements.
Also Read:
Complete List of Tax Account Codes and Tax Payment Type Codes for e-Billing
DGT Regulation Number 11 of 2025
Breaking Down the Article 21 Withholding Tax Provisions