The implication of new revenue recognition standards
HONG KONG POLYTECHNIC UNIVERSITY
School of Accounting and Finance
Intermediate Accounting 1
Assignment
The implication of HKFRS 15
Submitted by
WU Haoye
Student number: 13102758D
Word count: 1115
SEM Group: SEM001
Written by William WU (13102758D)
The implication of HKFRS 15 Revenue is the gross inflow of economic benefits during the period arising in the course of business of the ordinary activities of the entity, other than increases relating to contributions from equity participants.
It is of most significance of both the creditors and the shareholders for decision-making, and therefor it is attached great importance of it’s reliable and accuracy. The most crucial element of revenue, the criteria of Revenue Recognition Principles, has been the most profound topic during the years. A practical convergence of the revenue recognition criteria is urgently needed to solve inconveniences arising from it.
In response of these inconveniences, the International Accounting Standard Board (IASB) issued
International Financial Reporting Standard 15 (IFRS 15) in August 2014, which provides guidance on accounting for revenue from contracts with customers and will be effective in 2017. The new standard removes the inconsistencies and weakness of the past standards, also increase the comparability and transparency of the revenue recognition practice with a simplified presentation process. Aiming to provide the more useful information for the readers of the financial statement. Accordingly, Hong Kong
Institute of Certified Public Accountants (HKICPA) issues Hong Kong Financial Report Standard
15 (HKFRS 15) in correspond with the IFRS 15, which will apply to the revenue-generating activities of almost all entities that report under Hong Kong’s full financial reporting regime. The new standard adopts an asset-liability approach, and provides five-step process for revenue recognition as follows:
Ø Step 1: Identifying the contract
Ø Step 2: Identifying the
School of Accounting and Finance
Intermediate Accounting 1
Assignment
The implication of HKFRS 15
Submitted by
WU Haoye
Student number: 13102758D
Word count: 1115
SEM Group: SEM001
Written by William WU (13102758D)
The implication of HKFRS 15 Revenue is the gross inflow of economic benefits during the period arising in the course of business of the ordinary activities of the entity, other than increases relating to contributions from equity participants.
It is of most significance of both the creditors and the shareholders for decision-making, and therefor it is attached great importance of it’s reliable and accuracy. The most crucial element of revenue, the criteria of Revenue Recognition Principles, has been the most profound topic during the years. A practical convergence of the revenue recognition criteria is urgently needed to solve inconveniences arising from it.
In response of these inconveniences, the International Accounting Standard Board (IASB) issued
International Financial Reporting Standard 15 (IFRS 15) in August 2014, which provides guidance on accounting for revenue from contracts with customers and will be effective in 2017. The new standard removes the inconsistencies and weakness of the past standards, also increase the comparability and transparency of the revenue recognition practice with a simplified presentation process. Aiming to provide the more useful information for the readers of the financial statement. Accordingly, Hong Kong
Institute of Certified Public Accountants (HKICPA) issues Hong Kong Financial Report Standard
15 (HKFRS 15) in correspond with the IFRS 15, which will apply to the revenue-generating activities of almost all entities that report under Hong Kong’s full financial reporting regime. The new standard adopts an asset-liability approach, and provides five-step process for revenue recognition as follows:
Ø Step 1: Identifying the contract
Ø Step 2: Identifying the