IFRS industry insights: The revenue recognition project — An update for the manufacturing industry

Published on: 30 May, 2011

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).

These proposals would significantly affect the recognition of revenue in the manufacturing industry. Since issuing the ED, the boards have conducted extensive outreach. The comment period on the ED, which ended on the 22 October 2010, garnered over 950 responses and afterwards the Board hosted roundtable sessions that included participants from all constituencies, including preparers, users and auditors, from a wide cross section of industries.

Respondents from the manufacturing industry expressed concern over a number of proposals in the ED, including the identification of performance obligations, the satisfaction of performance obligations, the onerous contract test, contract costs, fulfilment costs and warranties. The Boards recently discussed these topics and made some tentative decisions which differ from the proposals in the ED and are following this up with further outreach activities.


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