International Financial Reporting Standards and Revenue Recognition

gross deferred payment is a very important component of financial score and reporting. The accounting principles governing revenue enhancement recognition can have a big impact on corporate accounting and the way contracts ar structured with customers. As a part of ongoing discussions to converge U. S. slackly Accepted Accounting Principles (generally accepted accounting principles) and International Financial Reporting Standards (IFRS), some proposals to deviate revenue recognition have been discussed.The following will discuss revenue recognition as it stands under U. S. GAAP and IFRS, as well as proposed changes to the revenue recognition principle. tax Recognition under U. S. GAAP module Accounting Bulletin, Topic 13 states, The staff believes that revenue ecumenicly is realised or realizable and earned when all of the following criteria are met 1. convincing evidence of an arrangement exists 2. Deliver has occurred or services have been rendered 3. the marketers pric e to the buyer is fixed or determinable and 4. Collectability is sensibly assured. Revenue recognition under U. S. GAAP can vary depending on industry, but the criteria listed by Topic 13 are generally utilise when recognizing revenue. Guidance for industry specific principles are covered under different U. S. GAAP pronouncements. Also under U. S. GAAP, any costs or losings that may be expected in connection with any returns shall be accrued in accordance with FASB St. No. 5 Accounting for Contingencies. sales revenue and costs of sales reported in the income statement shall be reduced to reflect estimated returns (FAS 48 par. 7).Revenue Recognition under IFRS. on a lower floor IFRS, guidance regarding revenue recognition are governed under 2 general accounting mensurations. According to IFRS, revenue is recognized when it is probable that future stinting benefits will flow to the entity and these benefits can be measured reliably (IAS 18). Revenue Recognition for specific in dustries are not addressed under IFRS and these two general accounting standards are applied mostly across different industries. Revenue recognition has been at the forefront of suggested changes regarding convergence to a atomic number 53 set of standards for financial reporting and accounting.Currently under U. S. GAAP, revenue recognition have more stringent criteria and governance can also be industry specific. IFRS differs in that there are only two broadly applied accounting standards when determining when to recognize revenue. The AICPA has announced that the IASB and FASB will run low towards issuing a single standard governing revenue recognition. The proposed standard will adopt standards similar to IFRS revenue recognition principles and eliminate U. S. GAAPs industry specific guidance. The changes will have a nasty effect on accounting and how businesses operate.