In May 2014, the International Accounting Standards Board (“IASB”) has published a new standard, IFRS 15 Revenue from contracts with customers (IFRS 15), which replaces all existing revenue guidance including IAS 18 Revenue (IAS 18) and IAS 11 Construction contracts (IAS 11). Under IFRS 15, the performance obligation for each contract must be identified, impacting the percentage of completion on certain projects.
The new revenue standard requires entities to review the terms and conditions of their existing contracts toidentify all goods and services sold to customers. Do you fully understand the financial and accountingimplications of your contracts? IFRS 15 contains new guidance in determining whether a cost should becapitalized or expensed when incurred.
Have you assessed the practical impacts on your planning? Under the new standard, revenue recognition over time (percentage of completion) is not an automaticright but subject to certain critical conditions. One or more of the new requirements will affect revenuerecognition for UAE companies. Are you ready for the new standard?