Possible alternative revenue recognition methods

The staff noted that during their discussions earlier in the week, the IASB had modified a condition present in two alternative revenue recognition methods, the 'Customer Benefit Method' (CBM) and the 'Performance-based Method with Application Accommodations' (PBM-AA). The IASB had suggested deleting the 'customer acceptance of performance to date (unless acceptance is perfunctory)' condition from the revenue recognition criterion in each method.

The debate quickly gravitated to a discussion of the CBM and PBM-AA methods, which are much the same. There seemed to be general agreement about the fundamental principles, but less agreement about how those principles were described (the 'labels' being used). FASB members noted that to accept the PBM-AA method might run the risk of contradicting guidance from the US Securities and Exchange Commission on 'bill and hold' sales.

Ultimately, the following decisions were made:

• The FASB did not object to the IASB's modification of the revenue recognition criteria in the CBM and PBM-AA.
• The FASB did not object to using the notion of a customer's obligation as the 'back-stop' trigger for revenue recognition.

The FASB was asked for an indication of which model it preferred:

• Three members favoured the CBM.
• Four members favoured the PBM-AA.

The due process document would discuss these alternatives.