FASB Statement of Financial Accounting Concepts (CON) 5, Recognition and Measurement in Financial Statements of Business Enterprises, set forth the historic guiding principle to revenue recognition. Pursuant to paragraph 83, for revenue to be recognized it must be (a) realized or realizable and (b) earned. Revenues are “realized” when products, goods, services, or other assets are exchanged for cash or claims to cash. They are “realizable” when related assets received or held are readily convertible to known amounts of cash or claims of cash. Revenue is “earned” when an entity has “substantially accomplished what it must do to be entitled to the benefits represented by the revenues.” SEC Staff Accounting Bulleting (SAB) 104, Revenue Recognition issued in December 2003 provided additional guidance to when revenue is realized or realizable and earned setting forth four basic criteria: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the seller’s price to the buyer is fixed or determinable, and (4) collectibility is reasonable assured. New Revenue Recognition Standard In a significant step towards convergence, the FASB and IASB (“the Boards”) issued the Exposure Draft, Revenue from Contracts with Customers in 2010. The goal was to create a single joint revenue recognition standard that companies could apply consistently across industries and capital markets thereby improve financial reporting. The Boards highlighted a number of improvements in the proposed standard - removing inconsistencies, improving comparability, requiring enhanced disclosures and clarifying the accounting for contract costs. Instead of focusing on “realized/realizable” and “earned” the Exposure D... ... middle of paper ... ...nd simply wait until revenue is collected. Revenue recognition has been uncoupled from the matching principle. *Conclusions – i.e. could become very judgemental, company confusion, check PwC and other info for concerns). This new standard represents a signification milestone in the convergence process and how revenue is not recognized. Instead of trying to match costs and revenues or determine when revenue is “earned” the new standards focus on performance and control. (use PwC info) *Notes – input more info on comments at first and second draft. Add in more detailed info about each step. Commentors conclusions (per conference and any online but note still early) and personal comments. IASB/FASB Proposal History – first ED, second, ED, final, comments – either at end of each section or summarize at end, see both IFRS and FASB Current thoughts – us, auditors, etc
...-based, charge-based, and contractual payment systems. (p. 7). CRC Press. Retrieved from http://books.google.com/books?id=sCzhN9HruM0C&dq=fee schedule based payment&source=gbs_navlinks_s
ASC 606 will provide better insight and comparisons across financial statements. It creates standards that can be applied across multiple jurisdictions and industries. Therefore, it will streamline the process and better represent changes in revenues and liabilities that companies are expecting or are aware of. It also attempts to bring policies from the FASB and IASB closer as they both passed similar policy
Plunkett, Linda M., and Robert W. Rouse. "Revenue Recognition and the Bausch and Lomb Case." CPA Journal Sept. 1998: n. pag. CPA Journal. Web. 16 May 2014.
On May 28, 2014, the Financial Accounting Standard Board and the International Accounting Standard Board issued ASC 606, Revenue From Contracts With Customers. The new standard will affect all entities including public, private, and not-for-profit that enter into contracts with customers that involve goods and services being transferred. It also effects contracts that transfers nonfinancial assets unless within the scope of other standards such as leases and insurance contracts. The main purpose of the standard is that involved party should recognize revenue that reflects the transfer of the good and services in an amount equivalent to they expect to receive in exchange for the goods and services. There are five steps to explain how the ASC 606 Standard works. The first step is to identify the contract with
Some revenue models are used in multiple businesses. Travel Network primarily employs the transaction revenue model. Airline and Hospitality Solutions primarily employs the SaaS and hosted and professional service fees revenue models, as well as the software licensing fee model to a lesser extent. Contracts with the same customer which are entered into at or around the same period are analyzed for revenue recognition purposes on a combined basis across our businesses which can impact our revenue recognized. Flexibility Property and equipment are stated at cost less accumulated depreciation and amortization, which is calculated on the straight-line basis.
... standard and help to reduce the preparer cost. And it has also enhanced the financial statements decision usefulness and make the organization prepare for expanded disclosure requirements.
6. The purpose is to emphasize those comments and make the readers pay clear attention to them. Orwells adds details to precise or give an explanation about the
Financial Accounting Standards Board. (1985). Statement of Financial Accounting Standards No. 86. Norwalk. Retrieved April 7, 2014, from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820922177&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=189998&blobheadervalue1=filename%3Dfas86.pdf&blobcol=url
To agree with ‘the notion that uniform standards alone will produce uniform financial reporting seems naïve’, first of all, uniform standard IFRS is described which is being widely used across the globe. After that, I discussed about what we really mean by uniformity, benefits of uniform standards and effectiveness of regulators. Lastly, reasons of not having uniform reporting despite of having uniform standards are explained.
will be included in each specific paragraph. This will help to avoid getting off of the subject and
Do you like our idea? What do you like about it? 3. Wrap-up and final thoughts: Summarize Review
Even though it was not mentioned in the Summary of Statement No. 157 by FASB, it could be said that both U.S. GAAP and IFRS relate to Objective No. 4. This objective looks to assess an entity’s prospects for future net cash inflows, exiting and potential investors, lenders, and other creditors need information about the resources of the entity, claims against the entity, and how efficiently and effectively the entity’s management and governing board have discharged their responsibilities to use the entity’s resources (Financial Accounting Foundation, 2010, para. 4). If the end user reviews the footnotes to see a hierarchy of Level Three is needed to price an asset or liability, this should be a flag for closer inspection on why this is needed and to confirm what investments the company is actually getting into.
Advertising effectiveness refer to the changes that advertising causes in the mental or physical state or activities of the recipient of an ad (Jellis Gerard).
3. The conclusion starts with a summary of the specific points of your essay, followed by a restatement of your