The Board discussed two alternative basis of revenue recognition; extinguishment-based method (EBM) and performance-based method (PBM) in the context of various examples prepared by the staff. Concern was raised about how the EBM model could be applied - in particular, how legal extinguishment could be assessed in all cases. The Board agreed to pursue a hybrid model that encompasses both the EBM and PBM models.
The Board also discussed the notion of customer 'utility' and appeared to agree that this term is unclear. The Staff were asked to articulate this notion on the basis of whether a customer is better off after the entity's performance (or part performance) compared to the situation prior to that performance.