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Summarize the guidance of the FASB regarding recognition of revenue on contracts.

Summarize the guidance of the FASB regarding recognition of revenue on contracts.

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●Revenue is one of the most important measures used by investors in assessing a company’s performance and prospects. ●However, previous revenue recognition guidance differs in Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)—and many believe both standards were in need of improvement.

●On May 28, 2014, the FASB and the International Accounting Standards Board (IASB) issued (press release) converged guidance on recognizing revenue in contracts with customers. ●The new guidance is a major achievement in the Boards’ joint efforts to improve this important area of financial reporting.

Presently, GAAP has complex, detailed, and disparate revenue recognition requirements for specific transactions and industries including, for example, software and real estate. As a result, different industries use different accounting for economically similar transactions

ekkarill92 answered 2 years ago
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