IFRS - 15: Revenue from Contracts With Customers a New Paradigm in Revenue Recognition

Abstract

Implementing IFRS 15 needs a change in the accounting system followed and needs a restatement of all open contracts. Recent advancements in technology have posed challenges in recognizing revenues as was the case previously. Cloud Computing (also called SaaS - Software as a Service), newer telecom policies and offerings, new business models in construction and real estate etc. have all compelled the world for a revision of the existing accounting practices, policies and standards. The revenue recognition requirements in International Financial Reporting Standards (IFRS) differed from those of US Generally Accepted Accounting Principles (US GAAP) which resulted in different accounting, and there by differences in margins, profits, financial ratios and taxation aspects of entities computed under both methods with similar business transactions.