Accounting In The Technology Industry - Re-Computing Revenue

The new Exposure Draft on revenue recognition, released on 24 June 2010, is another significant draft standard developed jointly by the two main standardsetters, the IASB and FASB, as part of their path towards convergence. What makes this standard even more significant is that it is in one of the areas that the two GAAPs differ most in their approach: IFRS as it stands has little guidance on revenue recognition compared to US GAAP which has a series of detailed rules dealing with many situations of application.

CFOs of technology companies are all aware that an accounting conclusion on revenue recognition can have a material impact on the financial results of any particular financial year and hence alter both an investor's valuation of the business and KPIs used for management incentive arrangements. Responses from technology companies to the preceding Discussion Paper issued in 2009 were generally positive and most welcomed the single revenue recognition model and