EFRAG published its draft comment letter on the IASB's ED 'Revenue from Contracts with Customers'. Comments are invited on the letter by 9 March, 2012.
In general, EFRAG welcomes the changes made to the 2010 ED, and notes that many of its concerns expressed in relation to the 2010 ED have now been solved. However, EFRAG disagrees with the proposals to:
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limit the onerous test to performance obligations satisfied over a period of time greater than one year;
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perform the onerous test at a performance obligation level;
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offset advances received against contract assets in all circumstances;
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being able only to allocate contingent amount to one or all performance obligations within a contract;
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require a list of specific disclosure requirements in IAS 34 Interim Financial Reporting; and
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include only sales-based variable consideration in the special requirements for when to recognise revenue related to licence agreements of intellectual property (paragraph 85 of the ED).
In addition, EFRAG thinks that clarification is needed on various issues, including determining whether a contract is a contract with a customer, or a contract with a partner or collaborator, and how to distinguish between a right of return, a customer acceptance clause and a put option.
Full paper
© EFRAG - European Financial Reporting Advisory Group
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