Preview

ASR 2

Powerful Essays
Open Document
Open Document
1644 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
ASR 2
UNIVERSITY OF TECHNOLOGY, SYDNEY
FACULTY OF BUSINESS

CONVERGED STANDARD ON REVENUE RECOGNITION
IFRS 15-REVENUE FROM CONTRACTS WITH CUSTOMERS

By
LE, DOAN YEN NHI
11809946
Word count: 1000
(excluding executive summary and reference)
Due date: 18th May 2015, 5 pm

Executive summary
On May 2014, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) had jointly issue the converged standard, IFRS 15, on the Recognition of Revenue from Contracts with Customers. The new standard create a common revenue recognition standard for both IFRS and US GAAP, it clarify the principle for recognizing revenue, enable consistently application in regardless of transactions, industries or capitals markets. Application of IFRS 15 will require preparers of financial statement to follow the 5 steps models with specific guidance. Therefore, improve the comparability in financial reporting. The reason for converging is due to the weakness and inconsistence and also the inadequate disclosure requirement of the existing standards. Most impacted industries are real estate, software development and telecommunication where customers purchase package of prepayment plans along with handset and post-delivery service. For instant, Telstra will have to reconsider their ‘New Phone Feeling’ program as when applying IFRS 15 the recognition of revenue for the handset will not be zero. Instead, they will have to follow step 4 of which require the entity to recognise the transaction prices for each performance obligations.

I. Introduction
Issuance of IFRS 15 is considered to be the significant milestone in financial reporting (McConnell P, 2014). IFRS 15 is a five step model that been underpinned by a core principle of which the entity will recognize revenue as a reflection of transferring of promised goods and services to customers in an amount that the entity expects to be entitle in exchange for those goods and services (Silva. M,
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Aren’t We Done Yet
    • 1043 Words
    • 5 Pages

    Aren’t We Done Yet

    Currently FASB and IFRS are working on a new comprehensive approach to revenue recognition. The new standard will likely be controversial as some practices would change considerably such as the percentage-of-completion method not being allowed unless the customer controls the asset during construction. Much is being discussed, but it is clear that both…

    • 1043 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Comparing the Gaap and Ifrs
    • 1065 Words
    • 5 Pages

    Comparing the Gaap and Ifrs

    This paper seeks to analyze the GAAP and the IFRS, their mandate and functions. Further, it shall compare the differences and similarities of the two standards which have such great implications to the functions of accountants, attorneys, corporate directors and financial officers.…

    • 1065 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    sab 104 summary
    • 393 Words
    • 2 Pages

    sab 104 summary

    On December 17, 2003, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, corrected copy, which amends parts of SAB No. 103 (in part, recognizing that many prior SEC standards are no longer necessary due to private-sector developments in U.S. generally accepted accounting principles [GAAP]). SAB No. 104 also provides new guidance on how publicly traded entities should recognize income. It focuses on applying the provisions of the Financial Accounting Standards Board's (FASB) Emerging Issues Task Force Issue 00-21, Revenue Arrangements with Multiple Deliverables, to publicly traded entities, especially in the areas of bill-and-hold-arrangements, immaterial obligations, and nonrefundable up-front fees, all relating to the delivery of sold goods and the resulting revenues.…

    • 393 Words
    • 2 Pages
    Good Essays
    Read More
  • Powerful Essays

    Where Does the Us Stand on the Adoption of Ifrs?
    • 1356 Words
    • 6 Pages

    Where Does the Us Stand on the Adoption of Ifrs?

    The globalization of markets over the past 50 years has led to the demand for increasingly comparable financial statements across countries. In response to this demand, the International Accounting Standards Board (IASB) was formed with the purpose of developing a set of high quality global accounting standards. Although a majority of developed markets have adopted the international standards, the United States has not. One reason for the delay in adoption is that many of the standards are very similar. However, there are also several key differences between the two. Presently, the United States Financial Accounting Standards Board (FASB) and the IASB have committed to work together to develop future standards jointly (FASB, 2011). Nonetheless, the key differences will have to be resolved and many believe the FASB will ultimately adopt international standards completely. This report seeks to discuss the US situation on the adoption of IFRS (International Financial Reporting Standards, as prescribed by IASB) and the possible effect of adoption on non-public businesses and the public?…

    • 1356 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    Comparing IFRS to GAAP
    • 889 Words
    • 3 Pages

    Comparing IFRS to GAAP

    In the Accounting industry, there are various principles and guidelines by which financial accountants, analysts, and organizations need to abide by. The International Accounting Standards Board (IASB) issues standards (IFRS) that have been adopted by the United States and several countries outside of the U.S. (Kimmel, Weygandt & Kieso, 2010). The IFRS along with Generally Accepted Accounting Principles (GAAP), professionals in the accounting industry use these guidelines as a baseline on which accounting practices are built upon. These standards are governed by the Securities and Exchange Commission (SEC) which ultimately oversees U.S. financial markets and accounting standard-setting bodies. Moving forward, the elements of IFRS and GAAP will be discussed to illustrate the similarities and differences and how it relates to Accounting and used in business practice.…

    • 889 Words
    • 3 Pages
    Good Essays
    Read More
  • Better Essays

    ACG 6257 Research Paper
    • 1267 Words
    • 4 Pages

    ACG 6257 Research Paper

    International Financial Reporting Standards (IFRS) and Generally Acceptable Accounting Principles (US GAAP) are standard-setting bodies that were established with the purpose of developing high quality, understandable, transparent and comparable financial information that could be useful to the financial statement users. The conceptual basis and many general accounting principles are very similar under IFRS and US GAAP. However, the application of either US GAAP or IFRS may be nevertheless significantly different. Consequently, the differences between US GAAP and IFRS may impact the figures presented in the financial statements of entities and lead to significant variances in financial ratios computed under US GAAP and IFRS.…

    • 1267 Words
    • 4 Pages
    Better Essays
    Read More
  • Powerful Essays

    Ifrs in Canada
    • 1244 Words
    • 5 Pages

    Ifrs in Canada

    In January 2006, The Accounting Standards Board of Canada (AcSB) made the decision to adopt the IFRS, after 2 years of research and consideration amongst the board and publicly. In January 2008 date for transition to the new system was announced. Convergence has been in full, with no areas in particular having significant differences to that implied in the IFRS. However Canada left, what was considered “ample time” (Martin, 2009) for the adoption of the IFRS in comparison to Australia and Europe, this left time for the converging to be well planned, monitored and learned but also left a lot of time for the International Board of Accounting Standards (IBAS) to…

    • 1244 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    FASB Revenue Recognition Paper
    • 1598 Words
    • 5 Pages

    FASB Revenue Recognition Paper

    Over the past few years, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working closely together to develop a new set of revenue recognition standards in an effort to merge the standards of FASB and IASB, lessen the amount of industry-specific differences in the standards, and make the standards more principles-based. Because revenue is very important to both internal and external users of financial statements when it comes to assessing the financial performance of an organization, it was vital for the boards to collaborate on creating a universal standard for recognizing revenue making comparability between companies that much easier. On May 28, 2014, a final version of these new standards were officially issued as a joint standard, for both FASB and IASB, on the recognition of revenue from contracts with customers, which is referred to as “ASC 2014-09” (Bramwell, 2014).…

    • 1598 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Why the U.S Should Not Adopt Ifrs
    • 1541 Words
    • 7 Pages

    Why the U.S Should Not Adopt Ifrs

    The purpose of this report is to look at the advantages and disadvantages that would occur if the United States were to switch their financial reporting standards from U.S GAAP to IFRS. My analysis will focus on: The differences between IFRS and U.S GAAP, the cost it would take to implement a new set of reporting standards, the education and training gaps, and the advantages vs. the disadvantages of adopting IFRS.…

    • 1541 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Revenue Recognition Convergence
    • 377 Words
    • 2 Pages

    Revenue Recognition Convergence

    The article “Revenue Recognition Convergence: The Contract-Based Model” is all about revenue recognition. It begins by explaining the conceptual background information to give you an overview of what revenue recognition is both in the US and internationally. Part of this section also discusses what problems have been found with revenue recognition. Because of these problems, the international and US boards have proposed an adoption of the “contract-based revenue recognition model.” This standard would apply to all contacts between companies and their customers, with some exceptions. There are five steps to this revenue recognition model. These steps are discussed individually within the article. The steps are (1) identify the contract, (2) identify the performance obligation(s), (3) determine the transaction price, (4) allocate the transaction price to separate performance obligations, and (5) recognize revenue. After the descriptions of each step, the article goes on to explain onerous performance obligations, contract cost, presentation, and disclosure. Each of these are important topics and will be on the re-exposure of the exposure draft in the coming years.…

    • 377 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Best Essays

    Ifrs and Gaap
    • 2481 Words
    • 10 Pages

    Ifrs and Gaap

    The United State is the latest country to agree on working towards converging it own accounting standard, US GAAPs (United States Generally Accepted Accounting Principles) with IFRSs (International Financial Reporting Standards). This report is about the evaluation of the convergence project to form a global standardized financial statement. IFRS is a set of international accounting standards stated how particular types of transactions should be reported in financial statements. However, U.S GAAP is a common set of accounting principles, standards and procedures that companies use to compile their financial statement. IFRS is issued by the International Accounting Standard Board (IASB) whereas U.S GAAP is issued by the Financial Accounting Standard Board (FASB). This report includes the objective and advantages of the convergence as well as the problems that may face to prevent the successful of convergence. Besides that, major milestones that have achieved and opinions about convergence project also written in this report.…

    • 2481 Words
    • 10 Pages
    Best Essays
    Read More
  • Best Essays

    Accounting Standard Board Paper 3
    • 1444 Words
    • 6 Pages

    Accounting Standard Board Paper 3

    The IASB and the US FASB have been working together since 2002 to achieve convergence of International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (GAAP). A common set of high quality global standards remains a priority of both the IASB and the FASB. The boards shared objective of developing high quality, common accounting standards for use in the world’s capital markets. Both boards believe that a…

    • 1444 Words
    • 6 Pages
    Best Essays
    Read More
  • Good Essays

    History of the Financial Accounting Standards Board and the International Accounting Standards Board
    • 883 Words
    • 4 Pages

    History of the Financial Accounting Standards Board and the International Accounting Standards Board

    The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are currently working together on a short-term international convergence project to remove a variety of individual differences between United States Generally Accepted Accounting Principles ( U.S. GAAP) and the International Financial Reporting Standards (IFRS) (Schroeder, Clark, & Cathey, 2005). U. S. GAAP are the laws of accounting in the United States. They govern how accountants measure, process, and communicate financial information about companies to the majority of Americans (Horngren, Harrison, Jr., & Bamber, 2005). Similarly, IFRS are principles, standards, interpretations, and the framework adopted by the IASB, stating how particular types of transactions and other events should be reported in financial statements (Investopedia, 2010).…

    • 883 Words
    • 4 Pages
    Good Essays
    Read More
  • Better Essays

    Acc 403 Generally Accepted Accounting Principles (Us Gaap)
    • 1029 Words
    • 5 Pages

    Acc 403 Generally Accepted Accounting Principles (Us Gaap)

    IFRS are International Financial Reporting Standards issued by the International Accounting Standards Board (IASB). Nearly 100 countries use or coordinate with IFRS. These countries or groups of countries include the European Union, Australia, and South Africa. While some countries require all companies to adhere to IFRS, others merely allow it or try to coordinate their own country’s standards to be similar. The IASB is working toward this goal in a partnership with some of the most influential accounting standard-setters across the globe. Because of globalization, it is paramount that the world markets be on one accord in…

    • 1029 Words
    • 5 Pages
    Better Essays
    Read More
  • Good Essays

    MODONNELL IFRS Conversion Challenges WEEK 2 ACG5135

    • 693 Words
    • 3 Pages

    MODONNELL IFRS Conversion Challenges WEEK 2 ACG5135

    The talk of convergence between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) has been ongoing since 2002. Since 2002 there have been objections by accounting professionals opposing the convergence. At this point, the naysayers seem to be victorious. The total adoption of IFRS by the United States has been shelved for the time being, but here is still a responsibility for US CPAs to keep abreast with IFRS updates. This is “based on a proposed timetable the U.S. Securities & Exchange Commission (SEC) developed, acceptance of IFRS in the U.S. could come as early as 2015, so understanding the standards is critically important to management accountants, auditors, financial analysts, corporate executives, and others involved with financial reporting.” (Smith, 2012)…

    • 693 Words
    • 3 Pages
    Good Essays
    Read More

Related Topics