This edition of New on the Horizon considers the proposals in the ED from an IFRS perspective, with additional focus on the potential impact on food, drink and consumer goods companies.
In the exposure draft ED/2010/6 Revenue from Contracts with Customers, the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) propose a new model for revenue recognition.
Under these joint proposals, entities, whether reporting under IFRSs or US GAAP, would apply a common approach to revenue recognition across transactions and across industries for the first time. For users of IFRSs, the proposed new revenue recognition model would replace accounting standards on revenue that were introduced in 1993 and have remained largely unchanged since then. In a US GAAP context, this single model would replace more detailed guidance under which many entities follow approaches that are specific to the industries in which they operate or types of transactions.