New on the Horizon: Revenue recognition for Aerospace and Defense companies looks at the potential impact of the revised proposals on A&D companies, discusses whether their previous concerns have been addressed, and highlights application issues relevant to both IFRS and US GAAP issuers.
Highlights include:
- Changes to the criteria for bundling goods and services and recognizing revenue over time mean that a broader range of contracts will qualify for percentage of completion accounting than under previous proposals.
- Many challenges remain for A&D companies, including assessing when to recognize unapproved or un-priced orders, and gathering the information required to meet additional disclosure requirements.
- A key question remains as to whether the proposals are sufficiently clear to be interpreted and applied consistently across the industry.