Revenue recognition

2 Minutes on Revenue Recognition with Sean Cable

After long deliberations (more than a decade), the IASB and FASB are reaching some agreement. The most recent decisions involve the constraint on recognizing revenue from variable consideration (that an entity should recognize revenue as performance obligations are satisfied only up to the amount that the entity is confident will not be subject to significant reversal in the future), collectability (requiring presentation of impairment of customer receivables as a separate line in the statement of comprehensive income, below gross margin), and licences (providing indicators to assess whether performance occurs at a point in time or over time, depending on the specific arrangement).

Other key issues still to be re-deliberated include allocation of transaction price, contract costs, disclosures and transition. Entities that currently follow industry-specific guidance should expect the greatest impact.

Click here to learn more about this project and the IASB’s decisions to date, or contact us.