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Proposed Accounting Standards Changes and Their Effects on

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Discussion of the Changes Proposed by the International Accounting Standards Board and How These Changes Will Affect the United States’ General Accepted Accounting Practices The changes that are proposed by the International Accounting Standards Board (IASB) will affect the United States’ Generally Accepted Accounting Principles (GAAP). These changes may have the most significant effects in the areas of revenue recognition, leases, and financial instruments ( ). The proposed changes under the IASB call for one standard be used in revenue recognition. This standard would apply to all industries and transactions. So under such a standard, no specific revenue for transactions and industry will exist. The specific revenue recognition will be replaced with a principle founded approach for determining revenue recognition. This new standard by the IASB could influence every entity’s daily accounting as well as the manner business is conducted in contracts with clients and/or customers. The standard would make it totally apparent when revenue is recognized and why (Journal of Accountancy July 24, 2010). The main aim of the proposed standard is that a company should recognize revenue when it transfers goods or services to a customer in the amount of consideration the company expects to receive from the customer or client (Journal of Accountancy July 24, 2010). There are specific areas that will receive the most signifiant changes. For instance, revenue would be recognized only from the transfer of goods or services to a customer. This alteration would affect some long-term contracts. Percentage-of -completion revenue recognition could be permitted but solely when the customer or client owns the work-in... ... middle of paper ... ...rement would be reflected on a company’s balance sheet. The balance sheet will mirror the fair value carrying the amount while amortized cost information is shown in profit or loss. The difference between the fair value and amortized cost data will be identified in other comprehensive income (Snapshot: Financial Instruments). The changes proposed by the International Accounting Standards Board (IASB) will have a significant affect on the General Accepted Accounting Practices of the United States. Most profoundly, the affect will be felt in the areas of revenue recognition, leases, and financial instruments. These changes are designed to make more consistent accounting procedures around the globe so that investors and other interested parties have a truer understanding of the financial health and stability of companies in which they have any type of investment.
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