On the 1st January 2018, companies will have to
adopt IFRS 15 Revenue from Contracts with Customers. The main reason for the
change was that the current revenue recognition standard IAS 18 and IAS 11
included lots of complex and detailed recognition requirements that were
industry specific and also some of the information was contradicting. The new
standard will also replace IFRIC 13, IFRIC 15, IFRIC 18 and SIC-31 (PWC, 2017).
The International Accounting Standards Board (IASB)- Financial Accounting Standards
Board (FASB) convergence project is a project aimed to eliminate a variety of
differences between the IFRS and the US GAAP (IAS plus, 2017). The introduction
of IFRS 15 and ASC 606 is a major achievement as it is starting to close the
gap between the differences in standards in the UK and America, as now for
revenue recognition they are all under a principle based standard instead of a
rule based standard. Therefore, if someone Is comparing a UK listed company
with a US listed company, the financial statements will be more comparable as
similar standards have been applied. (PWC, 2017).