Project Updates

Revenue Recognition—Joint Project of the FASB and IASB

Last updated on January 6, 2012. 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

On January 4, 2012, the Board published, for public comment, an Exposure Draft, Revenue from Contracts with Customers—Proposed Amendments to the FASB Accounting Standards Codification®. The Exposure Draft is open for public comment until March 13, 2012.

On November 14, 2011, the Boards published, for public comment, an Exposure Draft, Revenue from Contracts with Customers. The Exposure Draft is open for public comment until March 13, 2012.

  • 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 Russ Golden discussing the objectives, basic elements, and expected impact of the proposals contained in the Exposure Draft.

On June 24, 2010, the Boards published, for public comment, an Exposure Draft, Revenue from Contracts with Customers. The Exposure Draft was open for public comment until October 22, 2010.

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

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.

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 an entity’s financial performance and position. 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 need 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 have fewer requirements on revenue recognition, the two main revenue recognition standards, IAS 18, Revenue, and IAS 11, Construction Contracts, can be difficult to understand and apply. In addition, IAS 18 provides 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:
  1. Remove inconsistencies and weaknesses in existing revenue requirements.
     
  2. Provide a more robust framework for addressing revenue issues.
     
  3. Improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.
     
  4. Provide more useful information to users of financial statements through improved disclosure requirements.
     
  5. Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.
To meet those objectives, the FASB and the IASB are proposing amendments to the FASB Accounting Standards Codification® and to IFRSs, respectively.

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 (As of November 14, 2011) 

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

 
Additional Details