International Accounting Standards Board And The Us Financial Accounting Standard On Revenue Recognition

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IFRS 15: Background Revenue itself is an essential metric that is used to gauge a company’s present, past, and future. The requirements for recognizing revenue however are changing with the IFRS 15. The International Accounting Standards Board and the US Financial Accounting boards issued a new standard on the revenue recognition in a joint converged effort in both the IFRS and the US GAAP. “The core principle of the new Standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services.” ("IFRS - IASB And FASB Issue Converged Standard On Revenue Recognition"). Revenue Recognition Issues Before the IFRS 15 was issued, revenue recognition requirements under the US GAAP and the IFRS were different and required improvement. They conflicted with each other and resulted in different accounting for transactions that were similar. IFRS’s previous revenue recognition standards were difficult to understand and apply as well. There were inconsistencies and weaknesses in existing revenue requirements as mentioned earlier. Issues that did arise because of these were hard to deal with as well. Not only was the preparation of the financial statements more complex than it needed to be, the US GAAP revenue recognition standards are also quite broad in nature and different industries had different
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