Revenue Recognition: International Accounting (5104)

  • This Portfolio discusses revenue recognition principles under International Financial Reporting Standards (IFRS). Throughout, the Portfolio compares and contrasts the IFRS principles with U.S. GAAP.


Bloomberg Tax Portfolio 5104-2nd, Revenue Recognition: International Accounting Standards, discusses revenue recognition principles under International Financial Reporting Standards (IFRS). The IFRS rules regarding revenue recognition are similar in principle to the U.S. Generally Accepted

Accounting Principles (GAAP) rules on the subject; however, the two sets of rules may produce very different results under any given set of facts. Moreover, IFRS does not possess the detailed guidance that U.S. GAAP possesses. To wit, U.S. GAAP was developed through more than 140 pronouncements on revenue recognition, the rules of which are now spread among several Topics in the FASB Accounting Standards Codification. In contrast, IFRS contains fewer than 10 such pronouncements.

This Portfolio first explains the general principles of revenue recognition under the IFRS conceptual framework. It then examines the general principles of International Accounting Standard (IAS) 18, Revenue, as well as the specific principles related to the (1) sale of goods, (2) the provision of services, and (3) the receipt of interest, royalties, and dividends. It also discusses how these IAS 18 principles apply to the recognition of revenue from the sale of software, which is a topic that is governed by extensive U.S. GAAP guidance but is not specifically addressed under IFRS. An area that IFRS does address specifically — accounting for revenues from construction contracts — is outside the scope of this Portfolio. Lastly, the Portfolio discusses the joint project between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Boards (FASB) to converge the manner in which IFRS and U.S. GAAP approach revenue recognition issues.

Throughout, the Portfolio compares and contrasts the IFRS principles with U.S. GAAP. When appropriate, the Portfolio cites other portfolios that more fully explain the U.S. GAAP rules. Those other portfolios, all of which exclusively address the U.S. GAAP rules, are Bloomberg Tax Portfolio 5100, Starczewski, Mallek, and Beil, Revenue Recognition: Fundamental Principles (Accounting Policy and Practice Series); Bloomberg Tax Portfolio5101, Starczewski, Beil, and Mallek, Revenue Recognition: Product Sales and Services (Accounting Policy and Practice Series); and Bloomberg Tax Portfolio 5103, Starczewski, Fritz, and Rowe, Revenue Recognition: Software (Accounting Policy and Practice Series).

This Portfolio may be cited as Bloomberg Tax Portfolio 5104-2nd, Jones and Venuti, Revenue Recognition: International Accounting Standards (Accounting Policy and Practice Series).

Table of Contents

I. Background and Scope of Portfolio
II. The International Accounting Standards Board Framework
III. Principles For Recognizing And Reporting Revenue Transactions
IV. Sales Of Goods
V. Rendering Of Services
VI. Interest, Royalties, And Dividends
VII. Revenue Recognition For Software
VIII. Disclosure
IX. Joint Projects Of The International Accounting Standards Board And Financial Accounting

Richard Jones
Associate Professor Of Accounting, Taxation, And Legal Studies In Business
Hofstra University
Elizabeth Venuti
Chairperson - Dept of Accounting, Taxation
Frank G Zarb School of Bus.