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PSAB Exposure Draft – Revenue, Proposed Section PS 3400

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May 01, 2017

On May 1, 2017, the Public Sector Accounting Board (PSAB) issued an Exposure Draft that proposes a framework describing two categories of revenue – exchange and unilateral. Stakeholders are encouraged to submit their comments by August 15, 2017.

The PSAB proposes, subject to comments received following exposure, to issue a new Section on revenue.

The main features of the Exposure Draft are as follows:

  • A framework for revenue is proposed describing two categories of revenue — exchange transactions or unilateral transactions.
  • If the transaction gives rise to one or more performance obligations, it would be an exchange transaction.
  • Performance obligations are enforceable promises to provide goods or services to a payor as a result of exchange transactions.
  • Revenue from an exchange transaction is recognized when the public sector entity has satisfied the performance obligation(s).
  • The performance obligation(s) may be satisfied at a point in time or over a period of time.
  • If no performance obligations are present, it would be unilateral revenues.
  • Unilateral revenues result in increases in the economic resources of a public sector entity without a direct transfer of goods or services to the payor.
  • Unilateral revenues are recognized when a public sector entity has the authority to claim or retain an inflow of economic resources and a past event gives rise to a claim of economic resources.

The new Section would apply to fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted. The Section would be accounted for as a change in accounting policy applied retroactively with restatement of prior periods.

Review the Exposure Draft on the PSAB's Web site.

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