Revenue — FASB and IASB Reach Tentative Decision on Interim Reporting Period Disclosures

Published on: 20 Oct 2011

At their joint meeting this week, the FASB and IASB (the “boards”) discussed the application of certain of the disclosure requirements proposed in their revenue recognition project to both interim and annual financial statements. The boards’ staff recommended in their staff paper that in addition to information that has changed significantly from prior financial statements, entities should only be required to provide certain disclosures as of interim reporting periods, including the following “quantitative” disclosures:

(i) a disaggregation of revenue;

(ii) a tabular reconciliation of the movements in the aggregate balance of contract assets and contract liabilities for the current reporting period;

(iii) a maturity analysis of remaining performance obligations;

(iv) information on onerous performance obligations and a tabular reconciliation of the movements in the corresponding onerous liability for the current reporting period; and

(v) a tabular reconciliation of the movements of the assets recognized from the costs to obtain or fulfill a contract with a customer.

The boards debated whether specific requirements for interim financial statements were necessary, but they tentatively agreed with the staffs’ recommendation; however, the boards decided to include a question in their forthcoming exposure draft asking constituents to provide input on the costs and benefits of requiring the specific disclosures in interim financial statements. The boards plan to continue outreach activities as well to evaluate the proposal’s cost-benefit relationship.

In addition, the FASB tentatively concluded not to amend ASC 270, Interim Reporting, to specify interim disclosures on revenue or contracts with customers for nonpublic entities.

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