New Standards for Revenue Recognition Research Paper

New Standards for Revenue Recognition - Research Paper Example The IFRS stipulates minimum requirements on matters of revenue recognition. All in all the IAS 18 Revenue and IAS Construction Contracts are the main fields that it addresses. However, IAS 18 offers little explanation on issues that relate to multiple-element arrangements. The existing guidelines for revenue recognition as per the U.S. GAAP are so many. In the real sense, they cannot address the exact transactions or the target industries. With the mushrooming of new trends in transactions, the Board is facing challenges in addressing the issue. The first proposal was made on December 19, 2008 by both the IASB and the FASB. Bearing in mind that GAAP had a different approach from that of IFRS; the objectives made in the proposal were to make an improvement on the already existing guidelines. This gave birth to the concept of developing one model that can be utilized in addressing revenue recognition. In application, a company will be only able to recognize its revenue when the obligat ion is satisfactory. In this case, all services and transactions must satisfy their customer’s needs as per the contract (www.fasb.org, March 2014). On June 24, 2010, the Boards made a proposal to have the new joint standard for revenue recognition in place. In their view, adopting this proposal would bring the single revenue recognition standard in place. This will make it easy for IFRS and GAAP to address issues across all capital markets and industries with little differences (http://www.ifrs.org March, 2014).