Prepared by: Amanda Ng Ngee Pei; 21393604
Contents
Executive summary--------------------------------------------------------------------------------------3
Part A:
(I) Objectives and Main Changes to IFRS 15----------------------------------------------------3-4
(II) Possible effects of IFRS 15 on TPG-----------------------------------------------------------5-6
Part B:
Potential Impact of IFRS 15 on owner-manger -------------------------------------------------7-8 relationship and presentation of financial statements
Executive summary
Users of financial statements…show more content… Part A
(I) Objectives and Main Changes to IFRS 15
In mid 2014, the IASB proposed changes to revenue recognition under IFRS 15, which will come into effect from 1st January 2017 or earlier, if permitted. The main objective of the proposed changes was to improve on the previous revenue recognition requirements, which provided limited guidance, by providing enhancements to the consistency and quality of how revenue is reported and at the same time improve comparability in the financial statement of companies reporting under IFRS and US GAAP (Chartered Accountants 2013). The establishment of the principles that companies will apply will provide useful information to users of financial statements about the “nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer” (IFRS 15:1 2014).
By proposing the changes, IASB seeks to remove discrepancies and weaknesses in previous revenue recognition standards by providing concise principles for revenue recognition in a more robust framework. This increases the accuracy of the numbers reflected in financial statements, which give the users a better evaluation of the company’s performance and prospects. IASB also seeks to improve comparability between industries, companies, jurisdictions and capital markets by providing a single revenue recognition model those companies can seek guidance from. Improved comparability allows users of financial statements to compare