Canada - English

Details

  • Industry: Technology, Media and Telecommunications, Technology
  • Type: Business and industry issues
  • Date: 2/9/2011

Revenue recognition for technology companies 

In June 2010, the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) published an exposure draft on revenue from contracts with customers. The exposure draft included proposals to replace existing guidance under both IFRSs and US GAAP and proposes a single principles-based model under which an entity would recognize revenue as it satisfies the performance obligations in contracts with customers.
Download Now
PDF files require Adobe Reader to view
Download Adobe Reader

Technology companies have identified a number of topics that are consistent themes in their comments on the exposure draft to the Boards. Revenue recognition for technology companies summarizes some key concerns and suggestions made by technology companies.

 

In general respondents were supportive of a single revenue recognition model that could be applied across industries. Respondents had concerns in the following areas:

 

  • Some of the proposals are not considered appropriate, e.g. including credit risk in the measure of revenue
  • Some of the proposals would be difficult to apply in practice, e.g. recognizing revenue based on the estimated transaction price in a contract involving a variable transaction price
  • There is a lack of application guidance in some cases, e.g. in assessing the transfer of control for service contracts.