Revenue Recognition - Assignment Example

Revenue Recognition Revenue is an important aspect to individuals who use financial ments. Revenue is used in assessing the performance of the company. In the United States of America, Generally Accepted Accounting Principles and International Financial Reporting Standards are different (Bonham 2008). Current proposed standards are in line with the goals of standardizing revenue recognition. In the United States, GAAP consists of wide revenue concepts and various requirements for numerous industries or transactions.

The transactions can be the same economically but results to different accounting. International Financial Reporting Standards don’t have many requirements on revenue recognition. IAS 18 and IAS 11 are international accounting standards that focus on revenue and construction contracts respectively. The standards are difficult to understand and application in a situation. They provide minimal guidance concerning revenue recognition used for multiple arrangements. FASB and IASB has set new accounting rules designed to assist converge global standards.

The current and proposed standards will change how companies in the United States recognize their revenue on their financial and statements (http://www.fasb.org/intl/convergence_iasb.shtml).The proposed standards will have some different effects on various companies. The effects may include changes in the amount of deliverables of the contract. The standards will affect the manner in which revenue is allocated to different deliverables. These changes affect key financial measures for companies in the United States (http://www.ifrs.org/News/Press-Releases/Pages/leases-exposure-draft-August-2010.asp).Companies in the software’s industry have specific guidance that enables them to run efficiently.

Proposed standards provide software’s companies with an opportunity to develop their company with regard to the management and control of their financial statements. Companies will find it hard to market their products in a sensible manner to the company and get a positive reflection in the financial statements (http://proleasesoftware.com/fasb-lease-accounting). Financial Accounting Standards Board in conjunction with IASB is going to develop new accounting standards on the recognition of revenue from contracts.

They are attempting to converge financial standards to create a single standard that will apply across various industries. The action will improve revenue recognition rules and replace industry specific practices that are difficult to sustain. The main aim of these actions is to report meaningful information to financial users (http://www.fasb.org/intl/convergence_iasb.shtml).Work Cited"FASB, Financial Accounting Standards Board.." Convergence with the IASB. N.p., n.d. Web. 26 Mar. 2014. ."IASB and US FASB publish proposals to improve the financial reporting of leases." IFRS -. N.p., n.d. Web. 27 Mar. 2014. ."Lease Admin Module FASB Lease Accounting.

" ProLease Software. N.p., n.d. Web. 27 Mar. 2014. .Sharon, Seay. "The Economic Impact of FASBs New Lease Accounting Standards." Journal of Finance & Accountancy 1.33 (2010): 1-13. Print.Copy & Paste | Parenthetical"FASB, Financial Accounting Standards Board.." FASB Website Error Page. N.p., n.d. Web. 26 Mar. 2014.