Essay on Finance

2477 Words Nov 4th, 2014 10 Pages
EXPOSURE DRAFT “REVENUE FROM CONTRACTS WITH CUSTOMERS”
Name
Institution

Honest & Blonde
Address
Telephone number
TeleFones4U
Address:
Telephone number:
7 October 2014
Exposure Draft, “Revenue from Contracts with Customers”

Dear Sir,
It is our pleasure to provide our response and comments on the new exposure draft, which is on “revenue from contracts with customers” that was published by the FASB (Financial Accounting Standards Board) in the year 2011. TeleFones4U being one of the biggest telecommunication industry, it is with our great concern to bring your attention to some of the critical points in the new exposure draft. One of the concerns is based on the impact of the proposed revenue recognition model. As a
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Inquire for further clarification and guidelines
Most respondents’ seek for clear clarification and proper guidelines on the two main types of stand-alone selling prices. This included stand-alone price selection. In addition to this, another inquiry was made on how to determine stand-alone prices for those particular goods and services that are moved to the customers during the period of the contract (Halford, 2012). A question is raised on whether an organization can use a single stand-alone selling price to allocate its transaction prices in a fixed price contract. As per the proposed exposure draft, the response to this question is that; an organization’s different goods or services are treated as a one performance obligation if and only if, those goods and services are transferred to consumers using one channel. This response has got the implication on communication entities, and, therefore, a clear guidelines and clarification is of importance. TeleFones4U also seeks for further guidance on the application of the residual approach in a case where the prices of goods and services vary greatly. 2. Allocation of discounts
It is noted that the ways that have been provided by the proposed exposure draft on how to allocate discounts to contracts are too strict. This is so because; it does not give a clear reflection of the economics of the

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