Impact Of Ifrs 15 And Tpg

Despite those enormous advantages, it has been argued that IFRSS adoption lead to significant costs. The main argument is that IFRSs do not consider local needs and priorities as every country has their own ‘business environment, legal systems, cultures, language and political environment’ (Henderson and Peirson, 2000 cited from Malthus, S., 2004). However, to overcome this problem, IASB can accommodate flexible reporting standards that enable companies to choose alternatives that are more suitable for their external condition. It is opinion of some opponents of IFRS adoption that IAS is ‘insufficiently detailed’ (Uddin,M.S., 2005, p.4) that require accountants’ and auditor’ professional judgment. However, overly detail might be contra productive and not flexible in anticipating every changes and differences.

As the responsibilities of the global harmonization of accounting standards IFRS and GAAP transfer to IASB, FASB’s influence is waning. Advantages of the convergence include high quality financial reporting, which lowers cost of capital for investors and the cost of borrowing for companies. However, there are disadvantages to be noted, such as the costs of introducing IFRS to current and potential accountants and the risk of reducing the uniformity of financial reports due to the lax rulings of IFRS, which promotes earnings management amongst companies. Although arguments regarding the convergence remain prevalent, the completion of IFRS and GAAP is inevitable. Come year 2015, accountants, investors, and companies alike will discover whether or not the pros outweighed the cons; or vice versa.

In 2018 it will be mandatory that AASB111 and AASB108 are replaced by AASB15. This new standards main principle necessitates entities to recognise revenue to portray the transfer of goods or services to customers in amounts that mirror the payment, of which the company expects to be entitled. AASB15 also provides regulation for transactions that were not previously addressed thoroughly, such as service revenue and contract modifications. Essentially it presents a 5 step system of Identifying the contracts with the customer, identifying the separate performance obligations in the contract, determining the transaction price, allocating the transaction price to certain performance obligations and recognizing revenue when or as the entity fulfils performance obligations – This is demonstrated towards the end of the report with a

The major benefit of this proposal is that agreement exists that there is more objectivity in measuring and determining changes in assets and liabilities than there is in measuring and determining the completion of the earning process. After taking comment letters on the discussion paper of December 2008 and an initial exposure draft in June of 2010, the boards issued a revision of the proposal in “Proposed Accounting Standards Update (Revised), Revenue Recognition (Topic 605) – Revenue from Contracts with Customers: Revision of Exposure Draft Issued June 24, 2010.” The new document left the basis of the proposal the same and added implementation guidance and a tentative date for adoption. Recognizing revenue under the standard would be a five-step

As the business environment grows and companies find new ways to expand into their respective - or even new – markets, it is important that reporting standards stay up to date with changes and continue to assist companies in providing their users with useful accounting information. Information is labelled as being useful when it meets the

Since 2002, Financial Accounting Standards Board (FASB) and International Accounting Standards Board’s (IASB) have been working toward “convergence” of US General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). They have made significant progress in efforts to converge critical accounting standards such as those dealing with revenue recognition, financial instruments and leases. Once these projects are complete, the "era" of convergence will be at an end. Nevertheless, the benefits for investors of eventually getting to consistently applied, high-quality, globally accepted accounting

The revenue recognition framework had significant differences under The Financial Accounting Standards Board (FASB) and International Financial Reporting Standards (IFRS) provisions. The transformation of revenue recognition was necessary to provide the integrity to financial statements. Moreover, new revenue recognition standards should be applicable to all businesses (p50 A New World of Revenue Recognition).

The Company is planning to adopt International Financial Reporting Standards (IFRS) in the near future and should be made aware of the International Accounting Standards Board’s (IASB) relevant accounting guidelines. While FASB has extensive revenue recognition guidelines, IASB only has one, IAS 18. IASB’s revenue recognition guideline for the sales of goods [IAS 18.14] states that revenue

Bloom, R. & Kamm, J. (2014). Revenue Recognition, How we got here and where it will take us. Financial Executive (3). 48. Retrieved from: http://www.financialexecutives.org

The joint standards board analyzed IAS 18, Revenue, and IAS 11, construction contracts. Trying to go through financial statements that do not use the same standard may be time consuming for auditors, so IASB and FASB deciding to combine those standards and redefine how to record revenue under a new joint standard may be the better option. In 2009 the IASB announced the decision to issue a joint standard with the FASB on revenue recognition. For the past five years, the IASB and the FASB periodically announced updates to the standard previously issued. The businesses and industries that use this revenue recognition standard should constantly watch for updates to existing standards, along with issuance of additional conjoint standards by the FASB and IASB. After thoroughly evaluating existing differences between GAAP and IFRS, recommendations for future joint standards will be discussed.

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

IFRS has fewer requirements on revenue recognition, but follows the same basic principle of economic significance. Revenue can be recorded when t is probable that any future economic benefit associated with the item of revenue

In May 2014, IFRS 15 regarding revenue from contract with customers is released by International Accounting Standards Board (IASB) and Financial Accounting Standard Boards (FASB). Since Australian Accounting Strandard Boards (AASB) comply with IFRS, subsuquently, AASB issued AASB 15 replacing AASB 111 and AASB 118.

On June 24, 2010, the FASB and the IASB published for public comment an exposure draft, which was open for public comment through October 22, 2010. The key concept was about revenue from contracts with customers, except for financial instrument contracts, insurance contracts, leasing contracts, nonmonetary exchanges contracts. There are approximately 1,000 comment letters was received. Find one comment letter on the FASB website that raises questions about the proposed new standard and briefly explain the issue. The core principle of the proposed standard on revenue recognition is that a business entity should recognize revenue for goods and services such that the amount reflects the consideration that the business entity receives, or

As many know revenue is the amount of money that a company receives during a specific period/time. However revenue recognition is slightly different, it is an accounting principle under GAAP that determines the specific conditions of when revenue is recognized or accounted for. Since many believe that the standard was in need for improvement, on August 12, 2015 the FASB issued an Accounting Standards Update. The update based on the board’s decision decided that public organizations should apply the new revenue recognition to annual reports beginning after December 15, 2017. It is said that the new standard is major achievement for the Boards’ in improving this financial standard. The purpose of the new standard is to establish principles