Revenue Recognition
The Board and the US FASB are undertaking a joint project to develop a new, joint standard for revenue recognition. In IFRSs, the new standard will replace the existing standards on revenue recognition, IAS 11 Construction Contracts and IAS 18 Revenue.
This project is included in the MoU. Click here for more information on the MoU.
Where are we in the project?
On 19 December 2008 the boards published for public comment a discussion paper Preliminary Views on Revenue Recognition in Contracts with Customers.
In the discussion paper, the boards propose a single revenue recognition model that can be applied consistently across a range of industries and geographical regions. Applying the underlying principle proposed by the boards, an entity would recognise revenue when it satisfies its performance obligations in a contract by transferring goods and services to a customer. That principle is similar to many existing requirements. However, the boards think that clarifying that principle and applying it consistently to all contracts with customers will improve the comparability and understandability of revenue for users of financial statements.
Click here for a copy of the full discussion paper.
Read the press release introducing the discussion paper.
Click here to view the comment letters.
What happens next?
In July 2009, the boards discussed a summary of the responses to the discussion paper. Since then, the boards have been deliberating the issues raised by respondents with a view to developing an exposure draft for release in Q2 2010.
Why is the Board undertaking the project?
The main objectives of this project are as follows:
- to provide a single, revenue recognition model applicable to a range of industries
- to develop a model based on changes in specific assets and liabilities to eliminate weaknesses and inconsistencies in existing concepts and standards
- to converge IFRSs and US requirements.
Estimated project completion
The boards plan to issue a final standard in 2011.