Module 1: Discussion Forum
Select a converged, revised, or new accounting standard from the Financial Accounting Board (FASB) or the International Accounting Standard Board (IASB) that has been issued within the last three years and that is of interest to you.
Refer to the PwC Accounting and Reporting website (Links to an external site.) in this week's Required Readings. This provides a listing of the most recent accounting standards and financial
reporting-related developments and updates.
As you develop your initial response, you may want to refer to podcasts and videos available from PwC (linked in the Module 1 Interactive Lecture) and that concern your chosen standard or accounting theory. Note: Videos available on PwC's YouTube channel (Links to an external site.) are closed captioned.
Do the following:
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Prepare an annotation of the accounting standard for the discussion board. (An annotation is a summary of the main points of the converged, revised, or new accounting standard. It must be organized and formatted according to APA style.)
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Include the following points in your annotation: o Problem: What was the accounting theoretical or financial reporting issue addressed by the standard?
o
Results: What was the result or conclusion noted or what is expected to occur after companies implement the standard?
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Application: How might practitioners or students apply this standard in resolving specific accounting or financial-reporting issues?
Post:
For a while now, FASB and IASB have been convergent in the field of revenue recognition. The implications of ASC 606 and IFRS 15 have only become apparent. To enhance the reporting uniformity between U.S. GAAP and IFRS, the two standards setters effectively achieved convergence with these two
modifications to the standard called "Revenue from Contracts with Customers" (AICPA, 2016). Additional
guidelines on the timing and format of an entity's profit recording have been outlined by these latest modifications. Although revenue is often seen as a crucial measure of success, it was difficult to compare
sales across organizations before convergence. The timing of when a company may recognize income from a contract or sale was the main problem with revenue recognition. Additionally, this varied between sectors that used standardized accounting standards. Estimating when and how much income should be recorded was challenging for contracts that spanned many years, and it was particularly problematic for different goods and services with several outputs (Rosen, 2015). The new guidance aims to simplify the preparation of financial statements by eliminating the requirement to transform statements prepared under GAAP to IFRS and vice versa, eliminate inconsistencies and weaknesses in the previous revenue recognition principles, and improve the comparability of organizations, which will ultimately lead to more useful information for viewers of the financial statements (FASB, n.d.). All businesses that engage in contracts with consumers intending to transfer products or services are now impacted by these revenue recognition criteria. According to FASB (n.d.), recognizing revenue is the transfer of goods or services to customers in an amount that reflects the compensation to which the business expects to be entitled in return for such goods or services. This is the fundamental idea of ASC 606. ASC 606 gives companies a five-step methodology to follow to more closely approximate the principles-based revenue recognition method used by IFRS. These would include identifying the customer contract, identifying the contract's duties, figuring out the pricing, assigning the cost of the
