There are several differences between IFRS and GAAP in regardsto revenue recognition. First, there are differences in theconditions that must exist to recognize revenue from the sale ofgoods. For example, under IFRS, one of the conditions is that âTheentity has transferred to the buyer the significant risks andrewards of the goods.â Where as one of the GAAP conditions issimply that âDelivery has occurred.â Second, there are differencesin recognizing revenue from construction contracts. For example, inGAAP, âIf certain criteria are met, the percentage-of-completionmethod is used. If those criteria are not met, the completedcontract method is used.â In IFRS, âThe completed contract methodis prohibited. If the percentage-of-completion method is not usedbecause the final outcome cannot be reliably estimated, revenue islimited to the amount of recoverable costs incurred.â Third, thereare differences in recognizing revenue involving contingentconsideration. For example, under IFRS, if there is âtheprobability that economic benefits associated with the transactionwill flow to the entityâ¦revenue might be recognized prior toresolution of the contingency.â However, with GAAP, âRevenuerelated to contingent consideration should not be recognized untilthe contingency is resolved.â Lastly, in regards to customerloyalty programs, âthere is not specific guidance related toaccounting for customer loyalty programs. However, IFRS states thatâCredits awarded to program participants must be treated as aseparately identifiable component of a sales transaction.â PLEASECOMMENT ON THIS POST
There are several differences between IFRS and GAAP in regardsto revenue recognition. First, there are differences in theconditions that must exist to recognize revenue from the sale ofgoods. For example, under IFRS, one of the conditions is that âTheentity has transferred to the buyer the significant risks andrewards of the goods.â Where as one of the GAAP conditions issimply that âDelivery has occurred.â Second, there are differencesin recognizing revenue from construction contracts. For example, inGAAP, âIf certain criteria are met, the percentage-of-completionmethod is used. If those criteria are not met, the completedcontract method is used.â In IFRS, âThe completed contract methodis prohibited. If the percentage-of-completion method is not usedbecause the final outcome cannot be reliably estimated, revenue islimited to the amount of recoverable costs incurred.â Third, thereare differences in recognizing revenue involving contingentconsideration. For example, under IFRS, if there is âtheprobability that economic benefits associated with the transactionwill flow to the entityâ¦revenue might be recognized prior toresolution of the contingency.â However, with GAAP, âRevenuerelated to contingent consideration should not be recognized untilthe contingency is resolved.â Lastly, in regards to customerloyalty programs, âthere is not specific guidance related toaccounting for customer loyalty programs. However, IFRS states thatâCredits awarded to program participants must be treated as aseparately identifiable component of a sales transaction.â PLEASECOMMENT ON THIS POST