Abstract
International Financial Reporting Standard 15 (IFRS 15) Revenue from Contracts with Customers has significantly changed the philosophy of revenue recognition, not only to provide a fairer representation of corporate revenues, but also to inhibit the use of revenues for ‘earnings management’ purposes. We provide a framework to analyse the various effects of new and amended accounting standards. Changes in how companies recognise, measure, present and disclose their revenues (accounting effects) can affect how companies and their transactions are understood, both internally and externally (information effects), can change security prices (capital market effects) and can change how companies operate, and their costs and cash flows (real effects). We provide empirical evidence, based on a review of corporate annual reports, comment letters and interviews, on the effects of IFRS 15. We find evidence of accounting, information and, to a lesser extent, real effects, although, outside a few industries, IFRS 15 has had relatively little impact on the recognition and measurement of revenue.
Original language | English |
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Pages (from-to) | 474-503 |
Number of pages | 30 |
Journal | Accounting and Business Research |
Volume | 50 |
Issue number | 5 |
Early online date | 26 Jun 2020 |
DOIs | |
Publication status | Published - 26 Jun 2020 |
Keywords
- Financial reporting
- IFRS 15
- Revenue
- Accounting standards
- Real effects