Rethinking Revenue Recognition - The Case Of Construction Contracts Under International Financial Reporting Standards

Revenue recognition is one of the most crucial issues in financial reporting and the prevalent source for recent accounting scandals. International financial reporting standard setters are conducting a major project rethinking revenue recognition. Tentative proposals of the project Revenue Recognition feature an asset-liability approach relying on measurement at fair values or at allocated customer consideration amounts. This paper chooses construction contracts to illustrate and to evaluate the far-reaching changes implied by the proposals in a multi-period context.