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Revenue Recognition

ASC Topic 606 & IFRS 15



There may not be a better time to write this book, when landmark events are
about to shape up body corporate. In coming weeks, months and years huge
number executives, accountant and auditors would frequently search for Topic
606 and IFRS 15, which is indeed a most significant gesture towards US GAAP and
IFRS convergence. As the guidance is set to change, uncertainties, opportunities
and natural chaos associated with change management would lead to
discussion, talks, reviews and series of trainings to understand and build
perspectives.
The purpose of this book to summarize an experience, interpretation and
prospective of an accounting professional during this moment of change. The
most authentic technical citation on Revenue Recognition and their recent
updates can be referred at documents published by FASB and IASB.



For an entreprenure, when a small business starts counting cash inflow, away from accounting juggle, the revenue seems a very simple concept.The business goal may appear
relatively straight forward to make as much cash as possible for its owners. Revenue and cash-In are seen alternatively used words. As business grows bigger, It is not about
counting cash but also ensure accounting through generally accepted accounting principals.
SAB(Staff Accounting Bulletin)104 published in 2003 that reflects Security Exchange commission Staffs view which further included in Topic 13 as interpretative guidance,
identifies two essential components of revenue recognition as : Revenue 1) need to be earned 2) either be already realized or realizable. To further elaborate this, FASB
Concepts Statement 5-(Recognition and Measurement in Financial Statements of Business Enterprises), paragraph 83(b) states that "an entity's revenue-earning activities involve
delivering or producing goods, rendering services, or other activities that constitute its ongoing major or central operations, and revenues are considered to have been earned
when the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues". The revenue generally is realized or realizable and
earned when all of the following criteria are met:
1) Persuasive evidence of an arrangement exists - earned
2) Delivery has occurred or services have been rendered - earned
3) The seller's price to the buyer is fixed or determinable - Realizable
4) Collectibility is reasonably assured- Realizable
However as business processes and relates revenue clauses have grown more and more complex, the need of clarity were needed to address more shopisticated transactions.







Still in my Mindunder typecast