Differences Between The FASB And The IASB
Both sets of standards have a five step guide that is used to achieve their sole purpose. They are to identify the contract with the customer, identify performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize the revenue when, or as, the entity satisfies a performance obligation . In identifying a contract with a customer, both the FASB and the IASB require approval and commitment of the parties, as well as the identification of rights and payment terms. Also required is that the contract has commercial substance. It must be probable that consideration will be received in exchange for the goods or services being given to the customer.
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The second step is to identify the performance obligations in the contract. A performance obligation is simply the promise in a contract to transfer specified goods or services to the customer. In doing this, if there is more than one good or service that is promised to the customer in a contract, the entity must account for each as a separate obligation. This is so when the good or service is either distinct or is a series of distinct goods or services that are for the most part the
The second step is to identify the performance obligations in the contract. A performance obligation is simply the promise in a contract to transfer specified goods or services to the customer. In doing this, if there is more than one good or service that is promised to the customer in a contract, the entity must account for each as a separate obligation. This is so when the good or service is either distinct or is a series of distinct goods or services that are for the most part the