Welcoming the new Revenue Recognition Standard: Ind as 115 - Revenue From Contracts With Customers (en Inglés)
Reseña del libro "Welcoming the new Revenue Recognition Standard: Ind as 115 - Revenue From Contracts With Customers (en Inglés)"
The New Revenue Recognition Standard is a joint bold move initiated by both the FASB and the IASB to give top-lines of companies, across industries, a common denominator. It is a move from the fair value measure of measuring revenue, to one which takes into account what consideration the entity really expects to be entitled to receive from a contract with a 'customer'. The new standard broadens the definition of revenue to include newer concepts like costs to obtain and fulfil a contract, material rights and gain and loss from the sale of non-financial assets. There is specific guidance around contract combinations and contract modifications. Collaborative arrangements have come under the scanner as the collaborator may be acting as a 'customer'. The standard interacts with the new leases standard and lease and non-lease components of a contract would need to be separated. 'Transfer of control to a customer' is the axis of the new revenue recognition standard. As control usually transfers before risks and rewards usually do, entities may witness an acceleration in revenue recognition. Distinct goods/ services are now determined based on whether they are both individually distinct and are distinct within the context of the contract. This may lead an increase or decrease in performance obligations leading to difference in timing of revenue recognition. Provision for loss on contracts of the non-onerous kind for construction contracts have been done away with. Increased judgement is needed for demarcating between a sale/ lease/ financing, estimating variable consideration after applying constraints and in the capitalization and amortization of contract costs-especially in case of a principal versus agent situation. More disclosures are required. This book brings you the impacts from an exotic mix of industries as varied as aerospace and defense, engineering, media and entertainment, airlines, pharmaceuticals, health care, early-stage life sciences, software, construction and real estate, retail and e-commerce, hospitality, telecommunications, shipping, automotive, outsourcing and investment companies and promises deep learning. The new revenue recognition standard affects more than just revenue and impacts the business processes and results in dual SOX testing during the transition phase. With sufficient discussions and training, all managements will be able to do the 'heavy lifting'.
