A Look at Revenue Recognition Standards and Rulings - Free Paper Sample

Introduction

Change cannot be avoided, but it should be at the center of development. Each firm is struggling to be part of the new normal through all the available measures. The financing and accounting sector have not been left behind. There has been a contemplation however, regarding the turbulence in the accounting model to be adopted. This paper provides a discussion on the standards and the rulings on revenue recognition, both gross and net.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Revenue Recognition

The contemplation underway is focused on changing the standard to IFRS. They claim this attaching all their argument to the financial assets classified to be able to prepay. There has been a publication in response to this by the International Accounting Standards Board. The edition contains a proposal to the proposed amendment, where the prepayment features seem to have negative compensations.

The main issue of concern here seems to be the address of the concern raised about the classification of the prepayment assets by the IFRS 9. Therefore, there is a need for every financial asset to be measured at an amortized price based on all the other comprehensive income. This draft seems to contemplate an exception to the IFRS in specific business assets. These are the financial assets that would have the cash flow whereby there is only the payment of the interest as well as the principle, but they are not qualified to be measured in an amortized value.

If an entity has a recognition f the asset at the initial stage, then there will be insignificance in establishing the value that is fair fr the prepayment feature. The cost to be paid to a specific party that decides to terminate a contract needs to be commonly agreed upon, but it ought not to be only the payment of principal and interest. The party that is ending the agreement needs to be notified that by so doing, there is a possibility of receiving a considerable amount in so doing. This will only be made successful through proper assessment of the leaving party and deciding on its worth.

Proposed Amendments

There is also contemplation in the pending discussion drafts as documented I FASB and IASB, where there is a need for clarity on various issues as they emerge. These issues have been under contemplation in the amendment to IFRS and IAS. The problems that have been raised here include the clarification of the decision-maker who will be a chief manager. They need to decide on sensitive issues like the operations f the firm and the allocation of the resources. They also need to be clear on the assessment of the performance, and this needs to be in line with the chief decision-maker.

The amendments to be made here seem to be contemplating as well. The decision-maker can be an individual or a group of experts. In this contemplating amendment, the grou way will dictate that the members need not be members of the executive. As such, the entity needs to ut black and white the details of the proposed chief decision-maker where an individual or na group as contemplated.

The discussion, as outlined in the website, reveals the drafts with contemplating issues as well. There is a contemplation in the segment f adding the information. There is also the contemplation besides f the segments that can be reported. Consideration is also revealed in the reconciliation were the items of reconciliation need to be well described. The draft also contemplates the entities' creation of the segment associated with reports. All these need to be taken onto consideration, and this may be once among the many reasons why there have never been a com, comprehensive statement of the stakeholders on the proposed amendment.

IFRS and IFRA 11have also been marked for amendment. However, the turbulence that has been proposed seems to be contemplating having defined the business. The contemplation is linked to the business definition, where they suggest that the ruling needs to incorporate joint operation control. That the decision made in the business definition should allow it to acquire control over other operations (IFRS 2014). Also, the acquisition of control contemplates that one can have a joint m control as far as this meets the business definition.

Some insurance contracts went down during the time of IFRS 4. This also brings about contemplation, whereby there is a need to review how these entities will be reinsured. They need to be viewed from two perspectives, one of them being the reclassification. They need to be categorized to either profit or loss as their position in the business, and this can be considered an overview. The management may also decide to reconsider the entities in insurance based on their evacuation causalities. Therefore, an object may be put under probation for a specific period being unable to access the IFRS 9 services. This may be appropriate for the entities that may have revealed the inactivity in giving the contracts.

This seems to make things even worse since the individual entities need to have their details like financial reports well outlined for f reclassification. Having this in mind, it can be contemplated that some of the objects may disregard the deferral application and concentrate on the overall approach whereby those whose assets are worth will access IFRS for the first time.

However, some may fail to follow this suit and consider the deferral approach and make an IFRS 9 application immediately at the beginning of the financial year. However, these entities will need to provide precise details alongside the reasons why they have selected the option. The improvement of the financial services has been of concern. The accounting, as well as reporting responsibilities, need streamlining. Therefore, the organizations need to clear the air and take a commonly agreed path in all the financial endeavors. They need to provide education to the public on the current issues in finance. This need not be in society alone but to the auditors, users of the financial information, and the issuers.

Conclusion

IASB and FASB's commitment to ensuring that there is a uniform financial reporting standard and drafting principles of revenue recognition is incredible. All the inconsistencies that have been in existence seem to come to an end, as contemplated in the draft. If all these issues are addressed and implemented appropriately, all the financial matters' weaknesses will come to an end. The entities will have to provide reliable information as a requirement in the draft. This will help the management in the framework to deal with financial issues. These amendments need to be implemented since there is a need to have a comparative analysis of revenue identification through all the entities.

References

Deloitte (2017). IASB exposure drafts. Retrieved at:
https://www.iasplus.com/en/resources/ifrsf/due-process/iasb-eds

FASB (2014) Revenue Recognition—Joint Project of the FASB and IASB. Retrieved at:
http://www.fasb.org/project/revenue_recognition.shtml

IFRS (2014) Exposure Draft and Comment letters. Retrieved at:
http://www.ifrs.org/Current-Projects/IASB-Projects/Revenue-Recognition/Pages/Exposure-Draft-and-Comment-letters.aspx