Booking of contract revenue set to change

[SINGAPORE] In what may be the biggest change in recent years in the manner companies prepare their accounts, the world's global financial standards setting body has announced a substantial alteration in the way revenue is to be recognised.

The International Accounting Standards Board (IASB) - in conjunction with its American counterpart, the Financial Accounting Standards Board (FASB) - has released a new International Financial Reporting Standard: IFRS 15 on revenue from contracts with customers.

It will affect just about every entity that generates revenue, with the biggest impact expected on telecommunications, technology and real estate companies.

Coming into effect in January 2017, IFRS 15 will require companies to use a new five-step model, which shows the transfer of goods or services to customers in amounts that reflect the expected payments for these goods and services. It is a model that also calls for m…