Assignments - Revenue Recognition
Homework questions: 1. FASB and the IASB are working on a joint convergence project to bring US GAAP and IFRS revenue recognition rules into alignment. There are still some very significant differences between the 2 standards, which will require much work and compromise if a single standard is to be achieved. Select one area of revenue recognition and discuss the current difference between US GAAP and IFRS. What do you think needs to be addressed in that difference to achieve "convergence"? Do you believe convergence on that area is achievable? And if it is ultimately achieved, which standard, US GAAP or IFRS do you think it will most closely resemble in its final form?
2. If the US adopts IFRS and moves towards a principles-based system of recognizing revenue, do you think we will return to the problems and inconsistencies that existed prior to the many rules we now used in GAAP? Will this present problems for audit firms?
3. How do you think financial statement disclosures will be affected by a move to a more principles-based system of revenue recognition?
4. The world of science is changing rapidly and accounting rules are often difficult to apply when new products are developed. Many companies are near breakthroughs using stem cell technology for everything from growing replacement organs to engineering cells which can deliver cancer-killing viruses directly to tumors. How do you think revenue recognition will have to change to keep up (if it can)? No right or wrong answers here, just interested in your thoughts!