ASR 2
UNIVERSITY OF TECHNOLOGY, SYDNEY
FACULTY OF BUSINESS
CONVERGED STANDARD ON REVENUE RECOGNITION
IFRS 15-REVENUE FROM CONTRACTS WITH CUSTOMERS
By
LE, DOAN YEN NHI
11809946
Word count: 1000
(excluding executive summary and reference)
Due date: 18th May 2015, 5 pm
Executive summary
On May 2014, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) had jointly issue the converged standard, IFRS 15, on the Recognition of Revenue from Contracts with Customers. The new standard create a common revenue recognition standard for both IFRS and US GAAP, it clarify the principle for recognizing revenue, enable consistently application in regardless of transactions, industries or capitals markets. Application of IFRS 15 will require preparers of financial statement to follow the 5 steps models with specific guidance. Therefore, improve the comparability in financial reporting. The reason for converging is due to the weakness and inconsistence and also the inadequate disclosure requirement of the existing standards. Most impacted industries are real estate, software development and telecommunication where customers purchase package of prepayment plans along with handset and post-delivery service. For instant, Telstra will have to reconsider their ‘New Phone Feeling’ program as when applying IFRS 15 the recognition of revenue for the handset will not be zero. Instead, they will have to follow step 4 of which require the entity to recognise the transaction prices for each performance obligations.
I. Introduction
Issuance of IFRS 15 is considered to be the significant milestone in financial reporting (McConnell P, 2014). IFRS 15 is a five step model that been underpinned by a core principle of which the entity will recognize revenue as a reflection of transferring of promised goods and services to customers in an amount that the entity expects to be entitle in exchange for those goods and services (Silva. M,
FACULTY OF BUSINESS
CONVERGED STANDARD ON REVENUE RECOGNITION
IFRS 15-REVENUE FROM CONTRACTS WITH CUSTOMERS
By
LE, DOAN YEN NHI
11809946
Word count: 1000
(excluding executive summary and reference)
Due date: 18th May 2015, 5 pm
Executive summary
On May 2014, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) had jointly issue the converged standard, IFRS 15, on the Recognition of Revenue from Contracts with Customers. The new standard create a common revenue recognition standard for both IFRS and US GAAP, it clarify the principle for recognizing revenue, enable consistently application in regardless of transactions, industries or capitals markets. Application of IFRS 15 will require preparers of financial statement to follow the 5 steps models with specific guidance. Therefore, improve the comparability in financial reporting. The reason for converging is due to the weakness and inconsistence and also the inadequate disclosure requirement of the existing standards. Most impacted industries are real estate, software development and telecommunication where customers purchase package of prepayment plans along with handset and post-delivery service. For instant, Telstra will have to reconsider their ‘New Phone Feeling’ program as when applying IFRS 15 the recognition of revenue for the handset will not be zero. Instead, they will have to follow step 4 of which require the entity to recognise the transaction prices for each performance obligations.
I. Introduction
Issuance of IFRS 15 is considered to be the significant milestone in financial reporting (McConnell P, 2014). IFRS 15 is a five step model that been underpinned by a core principle of which the entity will recognize revenue as a reflection of transferring of promised goods and services to customers in an amount that the entity expects to be entitle in exchange for those goods and services (Silva. M,