- CFA Exams
- 2021 Level I
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 21. Understanding Income Statements
- Subject 4. Revenue Recognition Accounting Standards Issued May 2014
Subject 4. Revenue Recognition Accounting Standards Issued May 2014 PDF Download
In May 2014, the IASB and FASB each issued a converged standard for revenue recognition. The standards are effective for reporting periods beginning after 1 January 2017 under IFRS and 15 December 2016 under U.S. GAAP.
Key aspects of the converged accounting standards:
The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services.
Companies under contract to provide goods or services to a customer will be required to follow a five-step process to recognize revenue:
- Identify contract(s) with a customer
- Identify the separate performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the separate performance obligations
- Recognize revenue when the entity satisfies each performance obligation
The standard introduces new, increased requirements for disclosure of revenue in a reporter's financial statements.
Learning Outcome Statementsd. describe key aspects of the converged accounting standards for revenue recognition issued by the International Accounting Standards Board and Financial Accounting Standards Board in May 2014;
CFA® 2021 Level I Curriculum, 2021, Volume 3, Reading 21
User Contributed Comments 4
|akhlo||I think this is IAS 15 - pretty sure it is not effective until Jan 1, 2018 (but with 2017 comparative)?|
|SNaeem||No, Its IFRS 15|
|Ewan2015||ASC 606 is not effective until 1 Jan 2018 for issuers and 1 Jan 2019 for non issuers. IFRS 15 is effective 1 Jan 2018. Both you and CFA Institute need to update this LOS.|
|D3Er||This LOS is out of date|