Proposed Accounting Standards Changes and Their Effects on Essay

Decent Essays
Discussion of the Changes Proposed by the International Accounting Standards Board and How These Changes Will Affect the United States’ General Accepted Accounting Practices
The changes that are proposed by the International Accounting Standards Board (IASB) will affect the United States’ Generally Accepted Accounting Principles (GAAP). These changes may have the most significant effects in the areas of revenue recognition, leases, and financial instruments ( ).
The proposed changes under the IASB call for one standard be used in revenue recognition. This standard would apply to all industries and transactions. So under such a standard, no specific revenue for transactions and industry will exist. The
…show more content…
Also collectibility would affect the amount of revenue is recognized rather than whether revenue is recognized. In light of this, expanded utilization of estimates would be needed to decide both the amount to allocate and the basis for such allocation ( JA ).
The proposal would apply to all contracts that give goods or services to customers or clients, save leases, insurance contracts and financial instruments. Under the new standard, a company would need to disclose qualitative and quantitative information about contracts with customers and clients inclusive of maturity analysis for contracts extending past a year, and the important judgments and alternations in judgments done in applying the prosed standard to those contracts (JA ).
The proposed changes through the IASB will answers worries that several lease obligations are not documented on the balance sheet and that the present accounting for leases fails to illustrate the economics of all lease transactions ( Significant Changes). The jist of the proposal is to require and organization to recognize assets and liabilities coming from a lease. This shows an improvement as the existing lease standards do not require lease assets and lease liabilities to be recognized by many lessees. A lessee would admit assets and liabilities for leases with a top term of more than twelve months (Significant Changes). The acceptance, appraisal, and delivery of expenses an cash flow coming from a lease by a
Get Access