EY IFRSComments

Otherwise revenue recognition is limited to

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Unformatted text preview: ing that determination; the IASB is currently developing further guidance for identifying separable components within revenue contracts. Construction contracts Construction contracts are accounted for using the percentage-of-completion method if certain criteria are met. Otherwise the completed contract method is used. Construction contracts are accounted for using the percentage-of-completion method if certain criteria are met. Otherwise, revenue recognition is limited to recoverable costs incurred. The completed contract method is not permitted. Construction contracts may be, but are not required to be, combined or segmented if certain criteria are met. Construction contracts are combined or segmented if certain criteria are met. Criteria under IFRS differ from those in US GAAP. As indicated above, while similar principles of revenue recognition exist between IFRS and US GAAP, some of the differences are significant. And, further complicating both shortand long-term potential transition considerations, the FASB and the IASB are currently conducting a joint project to develop a new standard for revenue recognition, starting with a planned discussion paper in 2008. The project will explore two possible alternatives for revenue recognition under an asset and liability model (i.e., a “fair value” model, under which performance obligations are measured at fair value, and a “customer consideration” model, under which performance obligations would be measured by allocating customer consideration). BoardMatters Quarterly April 2008 The above examples indicate that the relevance and significance of differences between US GAAP and IFRS will depend significantly on a company’s particular facts and circumstances, as well as the continued effects of the FASB and IASB convergence projects that are underway. However, given the importance of the ongoing public dialogue around IFRS and the myriad transition decisions that are likely to surface in the next few years, both management and audit committees are encouraged to get an early start on deepening their understanding of IFRS, its differences with US GAAP and the combined current and future relevance to the company’s financial reporting. ✔ 11 Ernst & Young Assurance | Tax | Transactions | Advisory Additional resources Ernst & Young has a wide variety of publications on International Financial Reporting Standards (IFRS). Our newest, International GAAP® 2008, was written by our financial reporting professionals and provides practical guidance and professional interpretation that deals with many aspects of applying IFRS appropriately and effectively. Please visit www.ey.com/ifrs to learn more about obtaining a copy and to find recently issued IFRS publications, newsletters and other pertinent reference materials. The world is moving to IFRS...are you? Financial Executives International (FEI) Global Financial Reporting Convergence Conference 5 June 2008, New York, NY Learn more about the major differences between IFRS and US GAAP, advantage...
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This note was uploaded on 11/21/2009 for the course ACC acc 310 taught by Professor Mlot during the Fall '09 term at N.C. State.

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