IAS 18 was based around the transfer of risk

IAS 18 was based around the transfer of risk and rewards
which can cause problems when a transaction involves both a good and service
related to that good. To determine when the risk and rewards of ownership have
been transferred, the entity could consider the transaction as a whole. This
can cause problems as the entity may still have a contractual obligation
remaining to the service of the good but they have already recognised all the
revenue. For example, if someone bought a mobile phone and it had 1 years’
warranty. Under the current standard there is no specific guidance on how to
account for warranties, therefore the revenue wouldn’t represent the pattern of
the transfer to the customer of all the goods and services in the contract
(Putra, 2010).  Within IFRS 15 they have
now incorporated accounting for warranties in their standard. It distinguishes
between a warranty providing assurance and a warranty providing additional
service (Navarro Amper & Co, 2014). For a recommendation, business should
get additional direction on the identification and separation of warranty components.