The Financial Accounting Standards Board Essay

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On May 28, 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued joint guidance on revenue recognition in contracts with customers (Financial Accounting Standards Board). Previously, revenue recognition requirements in the United States generally accepted accounting principles (GAAP) differed from those of the IASB and both were in need of some improvement. The issue with GAAP was that there was a broad concept of revenue recognition and there were numerous revenue requirements for particular transactions and industries, which sometimes resulted in different accounting for similar transactions. With IFRS, they provided limited guidance which created difficulty when trying to figure out which one of their two main revenue recognition standards to apply to complex transactions (FASB ASU No. 2014-09). With the revenue recognition issues for both the FASB and IASB, they decided to join together to create one common revenue recognition standard in hopes to clarify the principles for recognizing revenue.
Some of the objectives of the new guidance is to remove any inconsistencies and weaknesses in the existing revenue requirements, provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, provide more useful information to users of financial statements through improved disclosure requirements, and…

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