The combination of FASB and IASB standards for Revenue Recognition introduced a new framework into the accounting profession. Domestic and foreign companies in the US need to adjust their structural elements to meet the newly created legal requirements. The law requires increased corporate participation in guiding the relationship between customers and contractors. An appropriate example of a modern company that has made recommendable progress towards efficient revenue recognition is the Oracle Company. The implementation process requires changes at various levels of decision-making to improve the availability and accuracy of financial information from customers and subcontractors (Oracle Company, 2017).
One of the notable elements of progress in Oracle Company are the changes made to JD Edwards EnterpriseOne and World software. Customers can pick a criterion in defining the role of Oracle Company in representing their interests to contractors. Although the company finds the new law applicable to increasing the level of information available, there is no significant change in the amount of revenue collection for modern enterprises. However, the business equally recognises the need to adapt to the changing environment in the accounting profession.
Digitalisation and data analytics around the world have also increased the amount of time that people spend in revenue collection activities. These new changes also require the integration of information from various business stakeholders to help speed up implementation and limit the level of resistance to change (Oracle Company, 2017). For this reasons, the paper draws information from frequently asked questions (FAQ) to increase the accessibility relevant information to all interested parties.
The primary factor in determining the implementation process of any project relies on the reliability of the available information - the majority of business stakeholders' specific difficulties in defining the purpose of the new law. The framework represents an old model in US GAAP which supported a broader context of revenue recognition. The structure covered several business transactions from different activities and hence created role ambiguities in financial analysis. However, the new model supports only two standards, IAS 18, Revenue and IAS 11, Construction Contracts. Although the number of requirements has reduced, these laws may be difficult to administer in complex business climates (Oracle Company, 2017).
The new law has also introduced a simple 5-step process to guide the relationship between customers and contractors. The first step is to identify the contractors with the customer and evaluate the separate obligations for the company and the customer. The two parties then decide on the transaction price and allocate the amount based on the guidelines. The last step of the process requires the company to recognise performance obligation for each transaction. The new framework thus seeks to increase business participation in governing the relationship between third-party business agents (Oracle Company, 2017).
The standard also allows companies to pick from some reporting methods in compliance with the terms of an agreement. Organisations can implement revenue recognition by using traditional aspects of accounting presentation or select a new framework to increase effectiveness. The alternative transition method provides that the law only applies to contractors who signed agreements after the application of the new standard. Based on these illustrations from Oracle, the effectiveness of the law depends on the level of effort that companies are willing to put to support the guidelines (Oracle Company, 2017).
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