In May 2014 the IASB and FASB finally published the new standard on revenue recognition IFRS 15 Revenue from Contracts with Customers which comes into force from 1 January 2018. The revenue recognition project took several years with the scheduled publication date of the new IFRS continually being pushed back. (Indeed the date for full adoption of the standard was pushed back from 1 January 2017 to 1 January 2018 as this coursework assignment is being written in early September 2015).
One of the industries which has been particularly affected by the uncertainty surrounding the development of the new standard has been the construction industry as IAS 11 Construction Contracts will be replaced by the new standard.
You are required to write a short briefing document for accounting firms with clients in the construction industry.
Prepare a briefing document on construction contracts under the new standard. Your briefing document should include:
i) A summary of how revenue is recognised within the construction industry under IAS 11.
ii) A description of the process of developing the new standard IFRS 15.
iii) A discussion as to why developing a new standard on revenue recognition has proved to be difficult and time consuming.
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