IASB and FASB publish revised revenue recognition exposure draft
Nov 14, 2011
On 14 November 2011, the IASB and FASB published for comment Exposure Draft 'Revenue from Contracts with Customers', a revised draft standard that converges the revenue recognition standard for IFRSs and US GAAP.
The goals of the exposure draft are to (1) improve financial reporting by creating a single revenue recognition standard, (2) clarify the principles for recognising revenue, and (3) create consistent principles that can be applied across various transactions, industries and capital markets.
The core principles of the 2010 exposure draft have remain largely unchanged. However, the boards have clarified and simplified the proposal in a number of areas:
- amending the principle for identifying separate performance obligations in a contract
- adding criteria to determine when a performance obligation is satisfied over time and, hence, when revenue is recognised over time
- simplifying the measurement of the transaction price
- aligning the accounting for product warranties more closely with existing requirements
- limiting the scope of the onerous test
- adding practical expedients for retrospective application of the proposals
- specifying the disclosures required for interim financial reports
Comment letters on the revised exposure draft are due by 13 March 2012.
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