Project Updates

Revenue Recognition—Joint Project of the FASB and IASB

Last Updated: February 5, 2010 (Updated sections are indicated with an asterisk *)

This project update summarizes the project activities and decisions of the FASB and IASB (the Boards). It was prepared by the staff and is for the information and convenience of the Boards’ constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.

Project Objective
Due Process Documents
*Decisions Reached at the Last Meeting
*Summary of Decisions Reached to Date 
Next Steps 
*Board/Other Public Meeting Dates 
Related FASB Documents 
Background Information 
Contact Information 

PROJECT OBJECTIVE

The objective is to clarify the principles for recognizing revenue and to create a joint revenue recognition standard for US GAAP and IFRSs that companies can apply consistently across various industries and transactions.

By developing a common standard that clarifies the principles for recognizing revenue, the boards aim to:

  • Remove inconsistencies and weaknesses in existing revenue recognition standards and practices
     
  • Provide a more robust framework for addressing revenue recognition issues
     
  • Simplify the preparation of financial statements by reducing the number of standards to which companies must refer
     
  • Improve comparability of revenue across companies and geographical boundaries.

DUE PROCESS DOCUMENTS

On December 19, 2008, the Boards published, for public comment, a Discussion Paper, Preliminary Views on Revenue Recognition in Contracts with Customers.

  • Download the FASB Discussion Paper. Download the IASB Discussion Paper which is the same except for minor differences in spelling, style, and format.
     
  • Read the press release introducing the Discussion Paper.
     
  • Read a snapshot of the Boards’ preliminary views in the Discussion Paper.
     
  • Listen to the FASB’s webcast on the Discussion Paper presented on March 27, 2009.

The Discussion Paper was open for public comment until June 19, 2009.

In July 2009, the Boards considered a summary of comment letters received. The comment letters will be considered further as the Boards further develop the proposed revenue recognition model.

The Boards expect to publish the Exposure Draft in 2010.

*DECISIONS REACHED AT THE LAST MEETING (February 3, 2010)

The Board considered the accounting for costs in contracts with customers. The Board decided that an entity should recognize as expenses all costs of obtaining a contract (for example, the costs of selling and marketing, including direct-response advertising). The Board also decided to develop guidance on how an entity should account for the costs of setting up and fulfilling a contract. The Board will consider the nature of that guidance at a future meeting.

Next steps

The Boards will continue their discussion of disclosures and consider scope, transition and additional cost guidance at the forthcoming meetings.
Additional Details