Project Updates

Revenue Recognition—Joint Project of the FASB and IASB

Last updated on September 1, 2010. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(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.

*Due Process Documents
Project Objective and Summary of the Proposed Model
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  

*DUE PROCESS DOCUMENTS

• Download the FASB Exposure Draft.
• Download the IASB Exposure Draft which is the same except for minor differences in spelling, style, and format.
• Read the press release introducing the Exposure Draft.
• Read the FASB In Focus and the IASB Snapshot, which provide summaries of the proposals contained in the Exposure Draft.
• Listen to a brief podcast recording of FASB Board Member Leslie Seidman discussing the objectives, basic elements, and expected impact of the proposals contained in the Exposure Draft.
• Listen to the following webcasts held by the FASB and IASB discussing the Exposure Draft:
  
  • Introduction to the Exposure Draft on Revenue Recognition 
  • Revenue Recognition Project: Potential Effects on the Technology Industry
  • Revenue Recognition Project: Potential Effects on Real Estate Contracts
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. 
The proposals in the Discussion Paper have been refined based on comment letters received and input from preparers, auditors, users, regulators, and other interested parties during other outreach activities.


• Read the Discussion Paper Comment Letter Summary 
For the most recent proposals, please refer to the Exposure Draft.



PROJECT OBJECTIVE AND SUMMARY OF THE PROPOSED MODEL

Revenue is a crucial number to users of financial statements in assessing a company’s performance and prospects. However, revenue recognition requirements in U.S. generally accepted accounting principles (GAAP) differ from those in International Financial Reporting Standards (IFRSs), and both sets of requirements are considered to be in need of improvement. U.S. GAAP comprises broad revenue recognition concepts and numerous requirements for particular industries or transactions that can result in different accounting for economically similar transactions. Although IFRSs provide less guidance on revenue recognition, the two main revenue recognition standards, IAS 18, Revenue, and IAS 11, Construction Contracts, can be difficult to understand and apply to transactions beyond simple transactions. In addition, those standards have limited guidance on important topics such as revenue recognition for multiple-element arrangements.

Accordingly, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRSs that would:


(a) remove inconsistencies and weaknesses in existing revenue recognition standards and practices;

(b) provide a more robust framework for addressing revenue recognition issues;

(c) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; and

(d) simplify the preparation of financial statements by reducing the number of requirements to which entities must refer.

To meet those objectives, the FASB and the IASB have jointly developed a draft standard on revenue and, hence, are proposing amendments to the FASB Accounting Standards Codification^TM and to IFRSs.

For additional information and a summary of the proposed model, please refer to the FASB In Focus or the Exposure Draft.


DECISIONS REACHED AT THE LAST MEETING

The Exposure Draft reflects all decisions made to date. For additional information, refer to Board meeting minutes under “Board/Other Public Meeting Dates”.