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IASB Proposes Updates on Revenue Standard

Matt Kelly | July 30, 2015

The International Accounting Standards Board has floated a few ideas to help clarify the new revenue recognition standard, and is asking for public comment on the proposals.

The exposure draft, published July 30, tackles issues such as how to identify performance obligations in a contract, how to determine whether a party involved in a transaction qualifies as “the principal” or “the agent,” and how to determine whether a license gives your customer access to your intellectual property.

All three questions are prime examples of the conceptual shift in the new standard:  away from bright-line tests for recognizing revenue, and toward a more principles-based approach that recognizes revenue based on the fulfillment of “performance obligations.” That idea puts much more focus on contracts with customers, and what...

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