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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…show more content…
III. Reason for replacing existing standards Current requirements of IFRS and US GAAP are different and often lead the recognition of similar transaction different economically, thereby, make it difficult for users to understand and compare revenue. The IFRS revenue recognition is diversity in practice since it contained limited guidance for a range of significant topics, for example, accounting for contract with multiple elements should be accounted as one overall obligation (BDO, 2014). US GAAP in oppose, have many revenue recognition standards with very detail guidance (FASB, 2014). It contains about 100 separate documents and protocols about revenue recognition (Sylva. M, 2014), but conceptually it is inconsistence with each other, thereby, different judgments have been made for different standard and result in inconsistence revenue recognition outcomes. Significant Inconsistencies are limit on contingent revenue, no observable selling price or entity have ongoing incidental obligation but still recognise all of the transactions as revenue despite the outstanding obligations that still need to be fulfill (Collin.S, 2015). Nevertheless, weaknesses that lead to the change are time value of money, variable consideration or timing on revenue recognition as entity remain uncertainty on when to recognise revenue due to lack of clear and comprehensive guidance on IAS 18.14, 18.20 and 18.26 (Deloitte, n.d) Moreover,
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