Preview

IASB & FASB Revenue Recognition

Powerful Essays
Open Document
Open Document
1797 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
IASB & FASB Revenue Recognition
Introduction & Intent of Project The International Accounting Standards Board (IASB) and The Financial Accounting Standards Board (FASB) have undertaken a joint revenue recognition project that clarifies the principles for recognizing revenue that can be applied consistently across various transactions, industries, and capital markets. This project will apply to all contracts with customers except leases, financial instruments and insurance contracts. The joint project will attempt to remove inconsistencies and weaknesses in existing revenue recognition standards by retrofitting, and thoroughly improving the recognition framework. The project provides a single revenue recognition model to improve comparability over a range of firms and industries (foreign & domestic), and simplifies the preparation of financial statements by lowering the number or requirements to which preparers must refer. The following research assignment discusses; the status of the overall International Financial Reporting Standards project, what some of the major changes in Generally Accepted Accounting Principals will be, and how theses changes will effect the preparation of the financial statements. It will then provide positive and negative reviews from users, ending with an overall opinion on the usefulness of the proposed changes.
Status of Project Currently, the memorandum on revenue recognition is in the re- deliberation phase, and has been since March 13, 2012; when the comment period on the last exposure draft (Nov 11) ended. Between September 2012 and May 2012, the Boards and staff of the project held over 200 events and meetings in numerous countries around the globe to attempt to get this project publicized and completed. As of November 16, 2012, IASB staff met with advocates from a number of groups to provide an update on the Board’s re-deliberations on the 2011 Exposure draft “Revenue from Contracts with Customers” and to obtain feedback on some of the topics that

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Accordingly to SAB 101, all of the following conditions should be accomplished to recognize revenue. During our analyses, we have identified several missing conditions in current situation, accordingly to information provided.…

    • 355 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    Boral Limited

    • 2384 Words
    • 10 Pages

    Revenue is recognized at fair value of the consideration received net of the amount of goods and services tax (GST). When events occurred like risks or rewards of ownership were transferred to buyer, revenues are recognised. Revenues from dividends are recognised upon declaration by controlled entities.…

    • 2384 Words
    • 10 Pages
    Best Essays
  • Satisfactory Essays

    Fasb System Orientation

    • 740 Words
    • 3 Pages

    The purpose of this paper is to determine why the Financial Accounting Standard Board (FASB) set-up the codification of Generally Accepted Accounting Principles (GAAP). In the following paragraphs the purpose and reason are defined. The break-down of the nine main areas are described with a break-down of each area. An accounting professional will use these areas many times in his or her career, so the knowledge offered is important.…

    • 740 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    ASR 2

    • 1644 Words
    • 4 Pages

    On May 2014, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) had jointly issue the converged standard, IFRS 15, on the Recognition of Revenue from Contracts with Customers. The new standard create a common revenue recognition standard for both IFRS and US GAAP, it clarify the principle for recognizing revenue, enable consistently application in regardless of transactions, industries or capitals markets. Application of IFRS 15 will require preparers of financial statement to follow the 5 steps models with specific guidance. Therefore, improve the comparability in financial reporting. The reason for converging is due to the weakness and inconsistence and also the inadequate disclosure requirement of the existing standards. Most impacted industries are real estate, software development and telecommunication where customers purchase package of prepayment plans along with handset and post-delivery service. For instant, Telstra will have to reconsider their ‘New Phone Feeling’ program as when applying IFRS 15 the recognition of revenue for the handset will not be zero. Instead, they will have to follow step 4 of which require the entity to recognise the transaction prices for each performance obligations.…

    • 1644 Words
    • 4 Pages
    Powerful Essays
  • Satisfactory Essays

    MFRS 15 Case Study

    • 835 Words
    • 4 Pages

    The previous two main revenue recognition requirement Standards in MFRS 118 and MFRS 111 provided limited guidance, consequently, and could be difficult to apply to complex transactions. Therefore, MFRS 15 is effective for annual periods beginning on or after 1 January 2018 to solve the problem. There are many differences that can be identified between the new standard of MFRS 15 and the current standard of MFRS 118 in recognising revenue.…

    • 835 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    Fasb Fra 2

    • 943 Words
    • 4 Pages

    If a transaction is within the scope of specific authoritative literature that provides revenue recognition guidance, that literature should be applied. However, in the absence of authoritative literature addressing a specific arrangement or a specific industry, the staff will consider the existing authoritative accounting standards as well as the broad revenue recognition criteria specified in the FASB's conceptual framework that contain basic guidelines for revenue recognition.…

    • 943 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    The globalization of markets over the past 50 years has led to the demand for increasingly comparable financial statements across countries. In response to this demand, the International Accounting Standards Board (IASB) was formed with the purpose of developing a set of high quality global accounting standards. Although a majority of developed markets have adopted the international standards, the United States has not. One reason for the delay in adoption is that many of the standards are very similar. However, there are also several key differences between the two. Presently, the United States Financial Accounting Standards Board (FASB) and the IASB have committed to work together to develop future standards jointly (FASB, 2011). Nonetheless, the key differences will have to be resolved and many believe the FASB will ultimately adopt international standards completely. This report seeks to discuss the US situation on the adoption of IFRS (International Financial Reporting Standards, as prescribed by IASB) and the possible effect of adoption on non-public businesses and the public?…

    • 1356 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Aren’t We Done Yet

    • 1043 Words
    • 5 Pages

    Currently FASB and IFRS are working on a new comprehensive approach to revenue recognition. The new standard will likely be controversial as some practices would change considerably such as the percentage-of-completion method not being allowed unless the customer controls the asset during construction. Much is being discussed, but it is clear that both…

    • 1043 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Revenue Recognition at point of sale: (1) Sales with Discounts (2) Sales with Right of Return: Three alternative revenue recognition methods, and recognize revenue only if all of six condition (3) Sales with buybacks (4) Bill and Hold Sales: buyer is not yet ready to take delivery but does take title and accept billing. Revenue is reported at the time title passes if (a) the risks of ownership have passed; (b) the buyer makes a fixed commitment of purchase the goods, requests the transaction be on a buy and hold basis, and sets a fixed delivery date; and (c) goods must be segregated, complete, and ready for shipment. FOB shipping-buyer FOB destination-seller…

    • 877 Words
    • 4 Pages
    Powerful Essays
  • Powerful Essays

    The purpose of this letter is to inform the stakeholders about an information session where the main topic of the session will be about their investments as well as recent changes in the industry that will affect their investments.…

    • 3491 Words
    • 12 Pages
    Powerful Essays
  • Powerful Essays

    Groupon Case Assignment 2014

    • 5787 Words
    • 27 Pages

    Phillips, T. J., Jr., M. S. Luehlfing, and C. M. Daily. 2001. The right way to recognize revenue. Journal of…

    • 5787 Words
    • 27 Pages
    Powerful Essays
  • Good Essays

    Deloitte LabCo

    • 779 Words
    • 4 Pages

    LabCo’s primary business concerns involve designing and manufacturing of industrial-sized machinery that is used by its customers in a variety of manufacturing ways, which satisfy the contact clause of the codification (ASC 605-35-15-2,3). The codification goes on to state that the percentage-of-completion method depends on the ability to make reasonable dependable estimates, which in turn relates to estimates of the extent of progress toward completion, revenues, and costs. In compliance with this, LabCo believe they could reasonably determine the estimates of the contract with Halibut. In previous contracts and agreements with Halibut, their method of revenue recognition was never questioned and a change to a different method was never…

    • 779 Words
    • 4 Pages
    Good Essays
  • Good Essays

    *IFRS requires separate display of the portion of profit or loss attributable to the minor-…

    • 730 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Over the past few years, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working closely together to develop a new set of revenue recognition standards in an effort to merge the standards of FASB and IASB, lessen the amount of industry-specific differences in the standards, and make the standards more principles-based. Because revenue is very important to both internal and external users of financial statements when it comes to assessing the financial performance of an organization, it was vital for the boards to collaborate on creating a universal standard for recognizing revenue making comparability between companies that much easier. On May 28, 2014, a final version of these new standards were officially issued as a joint standard, for both FASB and IASB, on the recognition of revenue from contracts with customers, which is referred to as “ASC 2014-09” (Bramwell, 2014).…

    • 1598 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    Discuss critically the shortcomings and criticisms of IAS 39 (AASB 139) which have given rise to…

    • 1996 Words
    • 9 Pages
    Powerful Essays