IFRS 15 Revenue from Contracts with Customers (discussion paper)
- Completed
- Completed
- Rasmus Sommer
Description
The IASB and FASB conducted a joint project to develop concepts for revenue recognition and a general standard based on those concepts. The general standard was expected to replace the existing standards on revenue recognition, IAS 11 Construction Contracts and IAS 18 Revenue.
The Boards' main objectives were to:
• eliminate weaknesses in existing concepts and standards. The revenue recognition requirements in IAS 18 focused on the occurrence of critical events rather than changes in assets and liabilities. Some people believed that this approach lead to debits and credits that did not meet the definition of assets and liabilities being recognised. A practical weakness of IAS 18 was that it gave insufficient guidance on contracts that provide more than one good or service to the customer. It was unclear when contracts should be divided into components and how much revenue should be attributed to each component. The International Financial Reporting Interpretations Committee received frequent requests for guidance on the application of IAS 18.
• converge IFRSs and US requirements. There were approximately 200 sources of standards and guidance on revenue recognition in US GAAP. These were not all based on consistent concepts. There were substantial differences between IFRSs and US requirements.
In December 2008 the IASB issued a Discussion Paper on the issue.
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The Boards' main objectives were to:
• eliminate weaknesses in existing concepts and standards. The revenue recognition requirements in IAS 18 focused on the occurrence of critical events rather than changes in assets and liabilities. Some people believed that this approach lead to debits and credits that did not meet the definition of assets and liabilities being recognised. A practical weakness of IAS 18 was that it gave insufficient guidance on contracts that provide more than one good or service to the customer. It was unclear when contracts should be divided into components and how much revenue should be attributed to each component. The International Financial Reporting Interpretations Committee received frequent requests for guidance on the application of IAS 18.
• converge IFRSs and US requirements. There were approximately 200 sources of standards and guidance on revenue recognition in US GAAP. These were not all based on consistent concepts. There were substantial differences between IFRSs and US requirements.
In December 2008 the IASB issued a Discussion Paper on the issue.
