Revenue Recognition
Project milestones
About the project
Revenue is a crucial number to users of the financial statements in assessing a company’s performance and prospects. The IASB and the FASB together initiated a joint project to clarify the principles for recognising revenue from contracts with customers. It applies to all contracts with customers except leases, financial instruments and insurance contracts. Read more
The main objectives of this project are as follows:
- To remove inconsistencies and weaknesses in existing revenue recognition standards by providing clear principles for revenue recognition in a robust framework
- To provide a single revenue recognition model which will improve comparability over a range of industries, companies and geographical boundaries
- To simplify the preparation of financial statements by reducing the number of requirements to which preparers must refer.
US GAAP consists of broad revenue recognition concepts around which numerous industry- and transaction- specific requirements have evolved to deal with individual types of contracts. IFRSs contain fewer standards, but the two main standards can be difficult to apply to complex transaction.
The boards undertook this project to provide clear principles on when revenue should be recognised and how much revenue should be recognised.
The key principles on which the proposed model is based – revenue is recognised on transfer to the customer, measured at transaction price- are consistent with much of current practice. The boards believe the proposed standard will improve financial reporting by:
- providing a more robust framework for addressing issues as they arise
- increasing comparability across industries and capital markets
- providing enhanced disclosures
- clarifying accounting for contract costs
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Project news
11 August 2010 Live webcast on Revenue Recognition project: potential effects on the technology industry on 12 August 2010
09 July 2010 A snapshot, a short plain-English introduction to the exposure draft, is now available for download.
24 June 2010 The IASB and FASB published for public comment an exposure draft Revenue from Contracts with Customers.
Click here to see all previous project news on this project. |
Last IASB meeting update
17 - 21 May 2010 The boards considered repurchase agreements; and sales of assets that are not an output of an entity's ordinary activities.
Read the full meeting update and all previous updates and observer notes for this project.
Click here to listen to the IASB meeting audio playback. |
Next discussion by the IASB
The boards expect to resume discussion of revenue recognition in contract with customers after publication of the ED and the expiry of the comment period. |
Page last updated: 11 August 2010