Revenue is an important number to users of financial statements in assessing an
entity’s financial performance and position. However, previous revenue
recognition requirements in International Financial Reporting Standards (IFRS)
differed from those in US Generally Accepted Accounting Principles (US GAAP)
and both sets of requirements were in need of improvement. Previous revenue
recognition requirements in IFRS provided limited guidance and, consequently,
the two main revenue recognition Standards, IAS 18 and IAS 11, could be
difficult to apply to complex transactions. In addition, IAS 18 provided limited
guidance on many important revenue topics such as accounting for
multiple-element arrangements. In contrast, US GAAP comprised broad revenue
recognition concepts together with numerous revenue requirements for
particular industries or transactions, which sometimes resulted in different
accounting for economically similar transactions.