Business Finance
CSUGC Revenue Recognition The GAAP & IFRS & The Government Accounting Regulation Essay

Colorado State University Global Campus

Question Description

I’m trying to study for my Accounting course and I need some help to understand this question.

The FASB and the IASB reached convergence on revenue recognition, an important accounting subject, in recent years. You should do some research on how the convergence process evolved on this accounting subject before both standard-setters eventually issued their respective standards addressing this subject. An online search will yield quite a bit of history and debate which occurred on this accounting subject between both the standard-setters and feedback from the public, including publicly listed firms. You may be able to find, also, at the respective FASB and the IASB websites, information related to the convergence process on this accounting subject.

Answer the following questions specifically in your Word document submission by copying and pasting each question in bold type with your answers below each question:

  1. Summarize in a few paragraphs the convergence process on revenue recognition: How long did it take; was it contentious; what were the areas of disagreement as the convergence process developed; and once the standard-setters converged, which side went further than the other, in your opinion, to make the converged standard a reality?
  2. In your opinion, did the FASB and the IASB reach convergence on revenue recognition in the issuance of their respective new accounting standards?
  3. If convergence was not reached, what are the major differences that still exist on revenue recognition between the FASB and the IASB? Be specific in identifying any major differences that still exist, including but not limited to the potential impact on reported revenues and net income of any existing differences.
  4. In your opinion, how did the differences between rules-based and principle-based standards influence the debate and ultimately the final revenue recognition accounting standard issued by both standard-setters?
  5. Once the new revenue recognition accounting standard is implemented by companies around the world in the future, will we really be able to compare Company A in Industry Z reporting under IFRS to Company B in Industry Z under the US GAAP? Explain in detail why or why not, justifying your opinion with specific details. You can even pick a specific company in a specific industry, if you wish, in preparing your answer to this question.
  6. Is either standard-setter still working on the implementation of the converged revenue recognition accounting standard? If so, what are 1 or 2 of the key implementation matters which are still being developed with regards to the new standard?
  7. After doing your research for this Assignment Option, how has your overall opinion of convergence and the development of a global set of accounting standards — the process, the goals, the results to date, and future prognosis — changed? Explain in detail.

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Final Answer

Attached.

Running head: REVENUE RECOGNITION

Revenue Recognition
Student’s Name
Institution Affiliation

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REVENUE RECOGNITION

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Revenue Recognition
Introduction
Currently, several standards regulate accounting practices and reporting. These standards
are set and maintained by their governing bodies. For instance, the US follows the General
Accepted Accounting Principles (GAAP), while most other countries worldwide follow the
International Financial Reporting Standards (IFRS). With globalization, using different
accounting standards can present significant challenges when comparing performance between
companies that use different standards, thus necessitating convergence. Convergence, in
accounting, is considered the act of coordinating accounting and reporting standards of various
regulatory bodies towards achieving the goal of being consistent, which allows for easy
comparability between financial measures globally. The Financial Accounting Standards Board
(FASB) and the International Accounting Standards Board (IASB) have integrated their
standards to arrive at a comprehensive global accounting standard.
Summarize in a few paragraphs the convergence process on revenue recognition: How long
did it take; was it contentious; what were the areas of disagreement as the convergence
process developed; and once the standard-setters converged, which side went further than
the other, in your opinion, to make the converged standard a reality?
Revenue is one of the essential metrics in a company’s financial performance. Revenue is
critical in analyzing a company's financial performance and comparing different companies'
performance. Before convergence, GAAP and IFRS employed distinct revenue recognition
techniques, which resulted in companies accounting and reporting differently for the same
transaction or entry. For instance, if a company based in the United States wanted to move

REVENUE RECOGNITION

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outside the US, they had to do an extensive reconciliation and adjustments to their financial
transactions from GAAP to conform to IFRS. According to Fangshu (2015), IFRS was criticized
for lacking adequate detail, while GAAP was considered to be overly analyzed and to lack and
sometimes confusing with conflicting rules. In January 2002, FASB proposed entering into a
Revenue Recognition Project to clean its GAAP standards to solve the differen...

New York University

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