IFRS industry insights: The revenue recognition project — An update for the telecommunications industry
In June 2010, the IASB and FASB (the 'Boards') took a major step towards developing an entirely new revenue recognition standard by issuing a set of proposals in the form of an exposure draft (ED). The proposals would significantly affect the recognition of revenue recognised in the telecommunications industry. Since issuing the ED, the Boards have conducted extensive outreach.
The comment period, which ended on 15 December 2010, garnered over 750 responses, and resulted in roundtable sessions that included participants from all constituencies, including preparers, users and auditors from a wide cross section of industries. Respondents from the telecommunications industry expressed concern over a number of proposals in the ED, including the identification of separate performance obligations, contract costs, the onerous contract test and modifications of contracts.
The Boards recently discussed those topics and made some tentative decisions which differ from the proposals in the ED. The Boards have been reaching out to constituents to gather feedback on some of these tentative decisions.
