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Revenue Recognition

Date recorded:

The Board considered a paper prepared by the UK Accounting Standards Board staff. This paper considered three views for revenue recognition: the US EITF approach, the wholesale approach, and the retail approach.

The Board discussed how to account for revenue in contracts where a customer pays but the supplying entity does not perform or only partially performs at the time the payment is made. The presented paper states that there is a liability and that this liability should be measured at fair value. It concludes that the fair value should be determined on the retail approach being the price that a purchaser would pay to purchase the goods or services in a retail market (rather than the price that the seller would have to pay another entity to provide the contracted goods or services).

The Board gave comments but no decisions were made.

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