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?

Week 6 Assignments – Revenue Recognition
DUE DATE: Sunday midnight of Week 6, submitted in a MS Word (or Excel if
computations required) document with filename format:
Last First_Week X hwk.doc or .xls Make sure your name appears on each page of the
homework using the header function.
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,