Page 14 - PowerPoint Presentation

IFRS 15 AND CHALLENGES IN ITS

IMPLEMENTATION

The world today is packed with different kinds of products,
services, transactions and many other activities that people

and business do. It is sometimes very challenging for
accountants to determine when and even whether to
recognize revenue in the financial statements. That is
exactly the main aim of the standard IAS 18 which is to

provide guidance on revenue
CA Mohammad Shahid

recognition and help in the application of the revenue recognition criteria.
However, on May 28, 2014, the FASB and IASB issued their long-awaited

converged standard on revenue recognition. Almost all entities will be
affected.
IAS 18 provided limited guidance on many important revenue topics such as

accounting for multiple-element arrangements. Transition to IFRS 15 intends
to cover the gaps from the previous standards such as IAS 18 and IAS 11 and
offers detailed guidelines for different type of transactions, such as sale with a
right of return, non-refundable upfront fees (and some related costs),
principal versus agent considerations and consignment arrangements, others.

Transition to IFRS 15 is a joint exercise involving consultants, auditees, and
auditors. Thus transition has wide range of impacts on business covenants,
banker’s analysis and is complex in application. Complexities present

challenges and every challenge is a professional opportunity

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