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IFRS industry insights — The revenue recognition project — An update for the consumer business industry

Published on: May 19, 2011

In June 2010, the IASB and FASB 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 consumer business industry.

Since issuing the ED, the boards have conducted extensive outreach. The comment period on the ED ended on December 15, 2010, and garnered over 950 responses. The boards subsequently hosted roundtable sessions that included participants from all constituencies, including preparers, users, and auditors from a wide cross section of industries.

Respondents from the consumer business industry expressed concern over a number of proposals in the ED, including the satisfaction of performance obligations, breakage, uncertain consideration, the licensing of intellectual property, the treatment of warranties, and contract costs. The boards recently discussed these topics and made some tentative decisions that differ from the proposals in the ED, and are following this up with further outreach activities.


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