Revenue Recognition Convergence
Holzmann, Oscar J. "Revenue recognition convergence: The contract-based model." Journal Of Corporate Accounting & Finance (Wiley) 22, no. 6 (2011): 87-92.
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. The book for this class begins talking about revenue recognition in chapter five on page 197. The section of the book that more closely relates to this article starts on pages 203 and its called IASB-FASB Revenue Recognition Project. This explains a little about the joint exposure draft from the IASB and FASB. Also, like the article it discusses the five steps in recognizing revenue. These steps are listed in the above paragraph. It explains each of the steps just enough to understand what it is without confusing you. The section finishes by giving a little more information on the exposure draft. I was in the class group that did our
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. The book for this class begins talking about revenue recognition in chapter five on page 197. The section of the book that more closely relates to this article starts on pages 203 and its called IASB-FASB Revenue Recognition Project. This explains a little about the joint exposure draft from the IASB and FASB. Also, like the article it discusses the five steps in recognizing revenue. These steps are listed in the above paragraph. It explains each of the steps just enough to understand what it is without confusing you. The section finishes by giving a little more information on the exposure draft. I was in the class group that did our