FASB and IASB Set Effective Date for New Revenue Recognition Standard: January 1, 2017
By Di Seghposs-Oracle on Mar 01, 2013
An update from our resident IFRS expert, Seamus.....The FASB and IASB met on February 20th and put the finishing touches to the new US GAAP and IFRS Revenue recognition principle, Revenue from Contracts with Customers. As they say on their websites, all that remains is for the staff to begin drafting the final standard. They decided on the effective date of the standard for new transactions: January 1, 2017.
Both the FASB and the IASB are in agreement that early adoption will not be permitted. There are now three arrangements organizations can use during the transitional period, between now and 2017:
1) Retrospective reporting, where each revenue transaction is tracked under both the old and the new in full
2) Retrospective reporting exploiting the permitted optional practical expedients previously published
3) Apply the standard to new post January 2017 initial revenue items, recognize the impact of the change as an adjustment to opening 2017 balance, and disclose the changes
It will be interesting to see how these options are explored by practitioners and professionals. They have substantially updated the disclosure requirements, introducing some qualitative elements, eliminating the onerous obligation disclosure, and adding some assumptions and methods disclosure.