Introduction Revenue recognition for construction industry is a complex area, now IASB and FASB are trying to work out a comprehensive new accounting standard for revenue recognition. Before they issue the new standard, which is best interest for our client to know current standard and development issues for revenue recognition. This article will introduce how the revenue recognised at present within the construction industry at first. Second the process of new standard development will be discussed. In third part of this article will demonstrate reason why it is difficult and time consuming to developing the new standard. In the end, it will consider the lasted exposure draft published by IFRS and past reversions to make a future perspective about some benefits new standard will bring to construction contract. Current revenue recognition within construction industry If the construction contract result can be estimated reliably, then at the end of each reporting period revenue related should be recognised according to completion level of the contract and if the outcome cannot be judge reliably, which revenue would be recognised only cover the contract cost(IFRS, 2012). The definition of construction contract is ‘a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use’ (IFRS, IAS11 construction contract, 2012). IAS 18 is the tandard for revenue recognition, which involved the contract of service (Mckeith and Collins, 2013). But it is difficult apply in certain industries like construction. Because the construction contract will take many years to be finished su... ... middle of paper ... ...mmittee Due Process Handbook. IFRS. (01/01/2012). IAS 11 Construction Contract IFRS. (no date provided). How we develop IFRSs. http://www.ifrs.org/how-we-develop-standards/Pages/how-we-develop-standards.aspx. Viewed at 30/11/2012. IFRS. (no date provided). Revenue recognition. http://www.ifrs.org/Current-Projects/IASB-Projects/Revenue-Recognition/Pages/Revenue-Recognition.aspx# . Viewed at 06/11/2013. McKeith, J. and Collins, B. (2013). Financial accounting and reporting (second edition).London: McGraw-Hill Education (UK) Limited. Melville, A. (2011). International Financial Reporting a practical guide (third edition). Essex: Pearson Education limited. PWC. (25/11/2013). Dataline A look at current financial reporting issues. No.2013-23 http://www.pwc.com/en_US/us/cfodirect/assets/pdf/dataline/dl-2013-23-boards-revenue-redeliberations.pdf (Assessed 10/12/2013).
Reimers, Jane L. (2003). Financial Accounting A Business Process Application. Upper Saddle River, New Jersey, Prentice Hall.
[1] Noreen, Eric W., Brewer Peter C., et al., Managerial Accounting for Managers, Second Edition, McGraw-Hill/Irwin, New York, NY, 2011.
Romney, Marshal, and Paul Steinbart. Accounting Information Systmes. 10th ed. Upper Saddle River: Pearson Education, 2006. 193-195.
The 'Standard' of the 'Standard'. Combination of project cost forecasts with earned value management. Journal of Construction Engineering & Management, 958-966. Sitnikov, C. (2012). The 'Standard'.
Marshall, M.H., McManus, W.W., Viele, V.F. (2003). Accounting: What the Numbers Mean. 6th ed. New York: McGraw-Hill Companies.
The purpose of this article is to explain one important accounting principle which is the revenue recognition principle. As a reporter, this will help to analyze companies charged by the SEC for accounting schemes related to revenues and will allow you to ask more meaningful interview questions.
Gibson, C. H. (2011). Financial reporting & analysis: Using financial accounting information. (12th ed.). Mason, OH: South-Western Cengage Learning.
Garrison, R. H., Noreen, E. W., & Brewer, P. c. (2010). Managerial Accounting. New York: McGraw Hill/Irwin.
One of the most debatable topics in the accounting industry today is the extent in which we should make the financial statements understandable to the general population. The FASB currently gears its reporting standards toward...
“The President and CEO of FEI, Colleen Cunningham, ranks revenue recognition in the top 3 financial reporting issues faced by accountants today. In 2006, a survey was conducted in the Financial Accounting Standards Advisory Council and the FASB. Majority of the members in both organizations felt that finding the solutions to the issues regarding revenue recognition should be FASB’s top priority. (Graziano 2005).” In this paper some of the challenges and issues concerning revenue recognition and the procedures set in place by various accounting organizations, including FASB will be discussed.
Heisinger, K., & Hoyle, J. B.(2012). Accounting for Managers. Creative Commons by-nc-sa 3.0. Retrieved from: https://open.umn.edu/opentextbooks/BookDetail.aspx?bookId=137
The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.
Marshall, D. H., McManus, W. W, & Viele, D. (2002). Accounting: What the Numbers Mean. 5th ed. San Francisco: Irwin/McGraw-Hill.
Marshall, D., McManus, W., & Viele, D. (2004). Accounting: What the numbers mean. [University of Phoenix Custom Edition e-text]. New York, NY: McGraw-Hill Companies.
Anderson, R. 1981, “The Usefulness of Accounting and Other Information Disclosed in Corporate Annual Reports”;