Revenue

RATHER than IDENTIFYING distinct PERFORMANCE obligations and RECOGNIZING revenue AS each is SATISFIED through the TRANSFER of CONTROL (the FIVE-step model UNDERPINNING IFRS 15, ASC 606, and THE modern ASBE No. 14), ASPE recognizes REVENUE based ON the TRANSFER of the SIGNIFICANT risks AND rewards of OWNERSHIP – a FRAMEWORK conceptually CLOSER to the PRE-2018 IAS 18 approach THAT IFRS 15 ITSELF superseded internationally. THIS is a GENUINELY fundamental, CONCEPTUALLY different STARTING point, RATHER than a MERELY mechanical VARIATION on the SAME underlying MODEL.

FOR revenue FROM services (or LONG-term contracts), an ENTERPRISE elects EITHER the PERCENTAGE-of-completion METHOD (RECOGNIZING revenue PROGRESSIVELY as the SERVICE is PERFORMED, WHERE the OUTCOME can BE reliably ESTIMATED) OR the COMPLETED-contract method (DEFERRING all REVENUE recognition UNTIL the SERVICE is SUBSTANTIALLY complete) – BOTH genuinely OLDER methods, DISTINCT from the SINGLE, unified PERFORMANCE-obligation satisfaction APPROACH IFRS 15 and ASC 606 REQUIRE internationally.

THE global SHIFT to the FIVE-step, control-BASED revenue MODEL was LARGELY driven BY complex, MULTI-element arrangements INCREASINGLY common AMONG public, TECHNOLOGY-oriented, and SERVICE-heavy enterprises – WHERE identifying DISTINCT performance OBLIGATIONS and ALLOCATING a TRANSACTION price MEANINGFULLY improved COMPARABILITY and TRANSPARENCY for CAPITAL markets INVESTORS. FOR MANY private enterprises, WHOSE revenue ARRANGEMENTS are OFTEN comparatively SIMPLER, and WHOSE primary USERS have DIFFERENT informational NEEDS, ASPE'S standard-SETTERS concluded the SUBSTANTIAL implementation COST of adopting the NEWER model WOULD likely EXCEED its INCREMENTAL benefit – CONSISTENT with the SAME cost-BENEFIT reasoning UNDERLYING Section 3065'S retained LEASE model (see the COMPANION poster).