The Board discussed the project plan and the measurement of performance obligations.
The Board considered the staff�s plan for completing this project. The Board confirmed that a discussion paper should be published later this year with a six-month comment period. It noted that this project has high priority and that the aim is to make significant improvements to the existing revenue recognition standards by June 2011.
Measurement of performance obligations
At its meeting in May the Board expressed a preliminary view in favour of measuring performance obligations using the customer consideration approach. At this meeting, the Board considered the description of this approach for inclusion in the forthcoming discussion paper.
On initial measurement, the Board broadly agreed with the proposed description of how performance obligations are measured at contract inception and the two views that support this decision. The Board also asked the staff to extend the discussion to include a brief description of the rejected measurement approach. The Board tentatively decided that the allocation of the total transaction price to individual performance obligations should be calculated pro rata to the entity�s observed or estimated stand-alone selling prices for each promised good or service. However, if a Level 1 fair value measurement, as described in US GAAP in SFAS 157 Fair Value Measurements, exists at contract inception for any of those goods and services, the promised good or service should be measured at that fair value. (The Board will decide in its project on Fair Value Measurement whether to adopt a notion of a Level 1 measurement.)
On subsequent measurement, the Board did not decide on the circumstances that would require remeasurement of performance obligations that are not regarded as onerous. The Board directed the staff to consider further how an onerous contract test would work before asking the Board to reach a preliminary view on remeasurement in a general revenue recognition standard.