Page 6 - FINAL CFA I SLIDES JUNE 2019 DAY 7

Session Unit 7:
24. Understanding Income Statements

Specific Revenue Recognition Applications (Under US GAAP (FASB) and under IFRS (IASB), p.43

tanties

If project outcome can be reliably measured, If Not, IFRS required that Revenues = Costs
GAAP/IFRS same for % of completion method and balance at the end!

Compare POC & CCM:
• POC is Bad on ‘prudence’ (reports revenues sooner) but good on ‘matching’/earnings volatility

barring balanced portfolio of projects
• POC more subjective (cost overrunning but behind schedule?) Both have no impact on
cash flows!