The Impact of IFRS 15 on Accounting Standards
Order ID |
53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
The Impact of IFRS 15 on Accounting Standards
IFRS 15 is the International Financial Reporting Standard for revenue from contracts with customers that was issued by the International Accounting Standards Board (IASB) in May 2014. The standard replaces IAS 18, the previous standard for revenue recognition, and introduces a new, principles-based approach to revenue recognition. The standard is effective for annual periods beginning on or after January 1, 2018.
One of the main impacts of IFRS 15 is on the timing of revenue recognition. Under IAS 18, revenue was recognized when it was earned, which could lead to different recognition patterns for similar transactions. IFRS 15 introduces a five-step model for determining when revenue should be recognized. The model is based on the transfer of control of goods or services to the customer, rather than when payment is received. This aims to provide a more consistent and transparent approach to revenue recognition.
Another significant impact of IFRS 15 is on the disclosure of revenue information. The new standard requires entities to disclose more information about their revenue, including the amount of revenue recognized during the period, the nature, amount, and timing of revenue from contracts with customers, and any significant judgments and estimates used in applying the standard. This provides financial statement users with more information about an entity’s revenue and performance.
IFRS 15 also has a potential impact on the financial statements. The new standard may result in earlier or later recognition of revenue, which in turn may lead to changes in an entity’s net income and cash flow. Additionally, the adoption of IFRS 15 may also require significant changes to systems and processes, which can be costly and time-consuming.
The standard also impacts different industries in different ways. For example, in the construction industry, the standard affects the recognition of revenue from long-term contracts, because it requires to recognize revenue when control of the asset is transferred to the customer, rather than when the revenue is earned. In the software industry, the standard affects the recognition of revenue from licenses and subscriptions, because it requires to recognize revenue over time, rather than at a point in time.
IFRS 15 also has an impact on the accounting for variable consideration. The new standard requires entities to estimate variable consideration, such as discounts or rebates, and include it in the transaction price. This can result in a different amount of revenue recognized than under IAS 18.
In conclusion, IFRS 15 has a significant impact on accounting standards for revenue recognition. The new standard introduces a new principles-based approach to revenue recognition and requires more disclosures about revenue information. The standard is effective for annual periods beginning on or after January 1, 2018.
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30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
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Use of Sources (worth a maximum of 20% of the total points). |
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10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. |
15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. |
Grammar (worth maximum of 20% of total points) |
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7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
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The Impact of IFRS 15 on Accounting Standards
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