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IASB officially proposes to defer the effective date of IFRS 15

  • IFRS - IASB Image

May 19, 2015

On May 19, 2015, the International Accounting Standards Board (IASB) published the expected Exposure Draft (ED) aimed at deferring the effective date of IFRS 15 “Revenue from Contracts with Customers” to January 1, 2018. Comments are requested by July 3, 2015.

Background

On May 28, 2014, the IASB issued IFRS 15 with an effective date of January 1, 2017 with earlier application permitted. After issuing the new revenue standard, which is substantially the same as the Financial Accounting Standards Board (FASB)'s ASU 2014-09 Revenue from Contracts with Customers, the IASB and the FASB formed the joint Revenue Transition Resource Group (TRG) to support the implementation of the new standard. As result of the discussions of the resource group, the IASB tentatively decided to propose some targeted amendments to IFRS 15. As some entities may wish to apply these amendments at the same time as they first apply IFRS 15, the IASB believes that a deferral of the effective date by one year would provide additional time for these entities to implement the amended standard. The IASB also acknowledges that IFRS 15 was issued later than had been intended, so implementation time was shorter than anticipated. Lastly, at the time of the IASB's discussion, the FASB already decided to propose to defer the effective date of their revenue standard by one year (a proposed ASU to that effect has by now been published) and the IASB concluded that it would be less confusing for the market if both IFRS and U.S. GAAP preparers apply the new standard at the same time.

Suggested changes

The amendments proposed in ED/2015/2 Effective Date of IFRS 15 (proposed amendments to IFRS 15) merely aim at changing the mandatory effective date of IFRS 15 from annual periods beginning on or after January 1, 2017 to annual periods beginning on or after January 1, 2018. Earlier application of IFRS 15 would continue to be permitted. Entities would also continue to be permitted to choose between applying the standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application.

The targeted amendments to IFRS 15 to clarify particular aspects of the requirements are not part of the Exposure Draft. Those proposed amendments will be included in a further Exposure Draft to be published later in 2015.

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