Revenue recognition in subscription-based business models

The subscription-based business model has emerged as a dominant paradigm across industries such as software, e-commerce, digital content, and utility services. Its defining feature of recurring payments coupled with continuous service delivery poses significant challenges for revenue recognition compared with traditional transaction-based sales models. This study examines the key issues associated with revenue recognition under prevailing accounting standards, particularly IFRS 15 and VAS 14, and identifies common risks related to the timing, measurement, and allocation of revenue. By analyzing the implications of subscription arrangements for accounting practices, the study contributes to a clearer understanding of how revenue recognition complexities affect the reliability and comparability of financial reporting in enterprises adopting subscription-based models.