Entities will be able to separately account for individual deliverables for many more revenue arrangements. By removing the criterion that entities must use objective and reliable evidence of fair value in separately accounting for deliverables, the EITF expects the recognition of revenue to more closely align with the economics of certain revenue arrangements. Click to
Download this Issue of Heads Up (PDF 158k).
Issue 08-1 will replace all references to 'fair value' in ASC 605-25 (FASB Codification section relating to multiple deliverables) with references to 'selling price' to clarify that the selling-price measure in Issue 08-1 is not a market-participant measure as required by ASC 820 (previously known as Statement 157). The selling price of an item is an entity-specific measure that represents the amount an entity would sell that item for in a stand-alone transaction with a customer.
|
Issue 08-1 must be applied prospectively to revenue arrangements entered into or materially modified in fiscal years beginning on or after 15 June 2010, but the vendor may elect to adopt it retrospectively. IFRSs do not include the type of guidance on multiple deliverables as is in Issue 08-1, but IASB and FASB currently are working on a joint project on
Revenue Recognition. A
Discussion Paper was issued in December 2008.