FASB Statement of Financial Accounting Concepts (CON) 5, Recognition and Measurement in Corporate Financial Statements, states the historical guiding principle of revenue recognition. In accordance with paragraph 83, for revenue to be recognized, it must be (a) realized or realizable and (b) earned. Revenue is “realized” when products, goods, services, or other assets are exchanged for money or claims on money. They are “realizable” when the corresponding assets received or held are readily convertible into known amounts of cash or cash receivables. Revenue is “earned” when an entity has “substantially accomplished what it must do to qualify for the benefits represented by the revenue.” SEC Staff Accounting Bulleting (SAB) 104, Revenue Recognition, issued in December 2003, provides additional guidance on when revenue is realized or realizable and earned, setting forth four basic criteria: (1) convincing evidence of existence of an agreement, (2) delivery has occurred or services have been rendered, (3) the seller's price to the buyer is fixed or determinable, and (4) collectability is reasonably assured. New revenue recognition standard In an important step toward convergence, the FASB and the IASB ("the Boards") issued the Exposure Draft, Revenue from Contracts with Customers in 2010. The goal was to create a single common revenue recognition standard that companies could apply consistently across industries and financial markets, thereby improving financial reporting. The Councils highlighted a number of improvements in the proposed standard: removal of inconsistencies, improved comparability, improved disclosure requirements, and clarification of contract cost accounting. Instead of focusing on 'achieved/achievable' and 'earned' exposure D...... middle of paper ... and just wait for the revenue to be collected. Revenue recognition is decoupled from the matching principle. *Conclusions – i.e. could become very critical, confusion within the company, check PwC and other information if any issues arise). This new standard represents an important step in the convergence process and in the way in which revenue is not recognized. Instead of trying to match costs and revenues or determine when revenues are “earned,” the new standards focus on performance and control. (use PwC information)*Notes – enter more information about the comments in the first and second draft. Add more detailed information about each step. Conclusions from commentators (by conference and online, but note still early) and personal comments. History of the IASB/FASB proposal – first ED, second, ED, final, comments – either at the end of each section or summarized at the end, see IFRS and FASBC. Current thoughts – us, listeners, etc..