Background

There was no agenda paper for this session. The Staff updated the Board on the most recent FASB Revenue TRG meeting which was held in November 2016 (which was observed by two IASB members a some IASB Staff), in which they discussed four topics (all on fully converged areas):

1. Recognition of revenue over time, specifically on how the two requirements of IFRS 15.35(c) (i.e. no alternative use and right to payment) should be assessed;
2. Capitalisation and amortisation of incremental costs of obtaining a contract, in which the TRG paper set out useful factors that entities should consider in assessing (i) which costs were incremental, and (ii) what was the appropriate amortisation period;
3. Applying the exception on usage-based and sales-based royalties when the contract guaranteed a minimum amount of royalties to be received; and
4. Accounting for upfront payments to customers – whether the upfront payment should be recognised as reduction in revenue over a period that was longer than the currently legally enforceable contract term.

The first two discussions were educational in nature and explained the FASB’s considerations when developing the Standard. As for the last two topics, the FASB highlighted the importance of considering the specific facts and circumstances of each case and the need to exercise judgement when making the assessment.

The IASB Staff was not aware that the FASB would take any follow-up actions on these discussions.