Revenue Recognition

Date recorded:

The objective of the Board's discussion was to decide whether it shares the FASB's views about the way in which the project should proceed.

The FASB had reconsidered the objective and scope of the joint project on revenue recognition. It decided that its preference would be to:

  • continue the joint project, with the same goals and scope as before, ie to develop a conceptual framework for revenue recognition and a general standard derived from that framework; but
  • at the standard level, use a different measurement attribute for performance obligations than has been proposed up until now. The FASB reaffirmed its past decision that the general standard for revenue recognition should require revenue to be recognised on the basis of changes in assets and liabilities (without consideration of additional recognition criteria, such as earning or realisation).

However, the FASB decided to pursue an approach in which not all assets and liabilities in revenue arrangements would be measured at fair value. Instead, performance obligations would be measured at 'performance value', that is, the amount at which the good or service could be sold to a customer. In practice, performance value would normally equal the consideration received or receivable from the customer.

The majority of IASB members indicated that their preference would be to continue with the joint project, with the same goals and scope as before but would be willing to compromise and explore the performance value measurement approach.

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