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International regulators review turnover posting

International IASB and North American FASB regulators have launched a broad-based initiative of commonly agreed principles for defining revenues. The aim is to enable Standards Boards to reach comparability worldwide independently of market segments and standards. At present, the final version of the standards is being debated and no radical changes are expected to emerge. Publication is scheduled for the second quarter of 2014.

The new IFRS “Revenue from Contracts with Customers” states that it is fundamental that the customer have full discretionary powers over goods and services for the revenue deriving from turnover to be registered. Control is defined as the “exclusion of others from use” and “achievement of economic improvement”. Analysis begins at the commencement of the contract with the customer. There are new rules governing the time in which turnover from longer duration contracts may be calculated. The requirements for the information on income from turnover noted in the appendix have been substantially increased by comparison to present rules. The new standard will be firstly applied to companies who commenced business on or after 1 January 2017. Anticipated application will be allowed.