United States

Revenue from Contracts with Customers

Jun 02, 2014
From the Financial Reporting Network and the IFRS Institute

This edition of Defining Issues reports that on May 28, 2014, the FASB and the IASB issued a new accounting standard that is intended to improve and converge the financial reporting requirements for revenue from contracts with customers. As part of the development of the final standard, the FASB and the IASB issued a joint discussion paper and two joint exposure drafts, considered public comment letters and feedback from other outreach efforts, and held numerous joint and separate meetings to redeliberate key aspects of the standard.

The core principle of the standard is that an “entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The Boards developed a five-step model and related application guidance, which will replace most existing revenue recognition guidance in U.S. GAAP and IFRS.

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