Accounting Principles And International Financial Reporting Standards

Introduction & Purpose Complexity in financial reporting is apparent especially when applying it to relevant accounting theories. "Complexity is ' 'the state of being difficult to understand and apply ' ' (SEC 2008, cited in Petersen, 2012). When we apply complexity to accounting we think of it in terms of applying it to accounting transactions which flow onto financial statements and how these were developed from the Accounting Standards. (Peterson, 2012, p.73).

Purpose of research. The purpose of research is to analyze and compare the revenue recognition under FASB and IFRS provisions. The research is built on other studies that focus on the revenue recognition model and converged standards. The value of this study cannot be overemphasized since the revenue is an essential metric of financial statements that provides a comprehensive knowledge to users of financial information. The revenue recognition framework is under the development and scrutiny since 2002.

REVENUE RECOGNITON Revenue recognition accounting standard ensures the correct revenue is recorded for each period of the income statement, it was previously based on the realization principle - requires revenue to be recognized when the earning process is virtually complete and is certain to collectability. FASB & IASB developed a new revenue recognition standard, Revenue from Contracts with Customers,” on May 28, 2014, ASU No 2014-09. (RRPA Revenue Recognition and Profitability Analysis-1-LO1-5).

Revenue Recognition Revenue Recognition – FASB. When stakeholders and other interested parties evaluate possible future investments opportunities or financial lending to a corporation, they take a close look at a firm’s performance which is highly measured by revenue; a necessary tool in decision-making. The GAAP standards in the U.S. however are very

After over a decade of extensive deliberation, the IASB and FASB officially released their joint revenue recognition standard to be applied under both GAAP and IFRS. The FASB and IASB which they have been in collaboration for a converged revenue recognition principle since 2008. The new revenue recognition standard represents a milestone in the convergence process, as it is the first fully integrated joint standard. The purpose of the new revenue recognition principle is to standardize across the board how companies should recognize revenue recorded in financial statements.

Introduction In 2008, the Securities and Exchange Commission (SEC) issued a road map for the United States (US) to implement International Financial Reporting Standards (IFRS) that would eventually lead to the dissolution of US Generally Accepted Accounting Principles (US GAAP) (Cox 2008). US GAAP is rules based system of accounting that contains over 25,000 detailed pages of guidance, whereas IFRS is a principles based system of accounting that contains 2,500 pages of guidance. IFRS allows accountants to exercise professional judgment when making many decisions. This paper will compare and contrast US GAAP with IFRS on Intermediate Accounting Topics.

Introduction The following research paper is about the new joint revenue recognition principles that were unveiled by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), which standardizes generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) on recognition of revenue in the United States. The new joint revenue recognition principle was created to increase the financial transparency and the comparability within the industries in the United States of America, and as well as the industries throughout the world. The companies in the United States currently use the GAAP standards and the rest of the world uses the IFRS. But each country

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

The introduction of the AASB 15 alters the existing accounting framework in regards to revenue recognition in contractual transactions. The new accounting standards require revenue to be recognised at the value that best represents the value that an entity would be entitled to, after it satisfying its contractual obligations. A 5-step model has been introduced to streamline the revenue reporting process.

Revenue recognition issues are the subjects of headlines in our daily newspapers, primarily because major corporations have recognized revenues that did not meet its revenue recognition rule. For businesses that use cash basis accounting, revenue recognition is a simple process; a sale equals revenue, but not for companies that use accrual basis accounting.  The more complex the business, the more specialized the industry, the more difficult the decision becomes for that business as to when to recognize earnings. Revenue recognition is one of the areas where managers can exercise their accounting discretion to achieve certain objectives. By looking at

From the beginning, the process of releasing the new SAB 101 that regulate Revenue Recognition was controversial. Revenue recognition differs between Generally Accepted Accounting Principles (GAAP) which is the method the United State (US) is using and International Financial Reporting Standards (IFRS) which is the method the rest of the world is using. Under GAAP, it is detailed and has specific requirements for revenue recognition transaction base on individual industries. Therefore, different industries use different accounting method for similar revenue recognition transactions which can be difficult to compare financial statements between different industries. The reason is revenue is one of the most important measures presents to the investors in order to assess a company’s performance and prospects. On May 28, 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued new guidance on revenue recognition to improve and establish more

Current standards for revenue recognition are set forth under Concepts Statement No. 5, Recognition and Measurement in Financial Statements of Business Enterprises (which were codified in Subtopic 605-10,

Article Write-Up 1 Yeaton (2015) research titled “A New World of Revenue Recognition” about the discussion of the new revenue recognition standard, jointly issued by FASB and IASB, which is effective after December 15, 2016 for public companies and after December 15, 2017 for private companies and non-profit organizations (p.50). Yeaton identified that the new revenue recognition standard will supersede most, if not all existing revenue standards (p.50). Yeaton summarized the purpose of the GAAP and IFRS converged standards on revenue recognition to provide consistent guidance to replace or remove the transaction and industry or geographic specific guidelines, to simplify or streamline current revenue criterion, and to enhance disclosure statement to demonstrate the nature, timing, amount and uncertainty of cash flow and revenue (p.50). Yeaton implied that the new standard of recognizing revenue will have significant impact on real estate and telecommunications companies, however it will provide variable impact on all companies, and in order to capture, to align and to justify business decision on revenue measurement, it could potentially require substantial changes on its existing process, policies and frameworks (p.50). Yeaton recognized the need of additional or frequent use of judgement and estimation to comply with the new requirements under the new principles of revenue recognition (p.50).

“A review of information about the convergence of GAAP and IFRS” Revenue recognition is one of the major areas that a convergence of Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) unleashes its fiery wrath on US domestic and global businesses. GAAP are the accounting principles that United States domestic companies currently use. GAAP was made and is regulated by the Federal Accounting Standards Board, known as FASB, established in 1973. This is a discussion of GAAP and IFRS, and how GAAP regulations for revenue recognition compare to the principals of revenue recognition established by IFRS standard IAS 18. IFRS was established by the International Accounting Standards Board (IASB) to develop quality and transparent global accounting standards. The United States began working with the IASB and has been on course to update GAAP to recognize the same accounting principles and standards as IFRS since 2002, after signing the “Norwalk Agreement.” The merger was originally scheduled for commencement in 2009 but was postponed a couple of times, and it is now set to take effect December fifteenth of next year for US public businesses. Revenue recognition is an accounting principal that determines when income from selling goods, rendering of services, contracts resulting in interest, dividends or royalties can be measurable and will be recorded as revenue. Revenue is the amount of money a business brings in during its

Introduction This assignment features the recognition and measurement of revenue depending on the source of revenue in accordance with the provisions of International Accounting Standards (IAS) 18 Revenue.