Proposed Standard Will Replace Ias 18 Revenue Essay

1579 Words7 Pages
The proposed standards mentioned above would affect the current practices in several ways. When adopted, the proposed standard will replace IAS 18 Revenue, IAS 11 Construction Contracts and related Interpretations. In US GAAP, it would replace the guidance on revenue recognition in Topic 605 of the FASB Accounting Standards Codification. The following section will explain some of the differences between the current US GAAP standard and the proposed model. One of the changes involves the criteria for what is considered the delivery of a product or the performance of a service. This is one of the four conditions needed to be able to recognize revenue under the current model. The condition currently states that revenue should not be recognized until the seller has substantially accomplished what it must do pursuant to the terms of the arrangement where substantial accomplishment of performance usually occurs upon delivery of good(s) or performance of service(s). Risks and rewards of ownership must also pass upon delivery or performance in order for revenue to be recognized. The proposed model considers the delivery of goods or the performance of services to be fulfilled once the control of the contractually promised goods or services has transferred to the customer and that revenue may be recognized. This delivery may occur at a point in time or over time. Indicators of the transfer of control include: right to payment, passage of legal title, physical possession, significant
Get Access