The latest proposal from the Financial Accounting Standards Board for how companies should recognize revenue falls somewhere between an earlier proposal and current practice—maybe a little too close to current practice for at least one board member’s comfort, but far enough away from current practice still to give financial reporting departments lots to consider.
FASB and the International Accounting Standards Board published a revised draft of their joint proposal to overhaul the rules for revenue recognition, one of the cornerstone projects in a larger effort to converge U.S. and international accounting standards. The plan retains the core principles established in the original proposal from June 2010 outlining a five-step process for companies to follow to determine when and how to recognize revenue. They require companies to:
