Revenue for Telecoms

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8 | Revenue for Telecoms – Issues In-Depth | Putting the new standard into context Transition Resource Group for revenue recognition The IASB and the FASB’s Joint Transition Resource Group for Revenue Recognition (TRG) was formed for the purpose of: – soliciting, analyzing and discussing stakeholder issues arising from the implementation of the new standard; – informing the IASB and the FASB about implementation issues that will help the Boards determine what action, if any, will be needed to address them; and – providing a forum for stakeholders to learn about the new guidance from others involved with implementation. The TRG advises the Boards, but does not have standard-setting authority. The members of the TRG include auditors, financial statement preparers and users from various industries and geographies (both United States and international), and both public and private companies and organizations. Others who attend and participate in the meeting as observers include the IASB and FASB Board members and staff, the PCAOB, the SEC, AICPA and IOSCO. The TRG had its first meeting in July 2014 and has held six joint meetings since that time. During these meetings more than 50 issues were addressed, with some resulting in the amendments issued in early 2016 by both the IASB and FASB. In addition to the TRG, there are various other industry groups – including the Telecommunications Revenue Recognition Task Force formed by the AICPA – that are discussing how to apply the new standard. A telecom entity should actively monitor these activities and consider adjusting its implementation plan if new guidance is developed. The TRG has discussed a number of issues relevant to telecom entities. The conclusions of the TRG on those issues have been reflected in this publication. Telecom entities are encouraged to review the relevant TRG agenda papers and meeting summaries to ensure the TRG discussions are reflected in their accounting policy choices. Home © 2016 KPMG LLP, a Delaware limited liability partnership and the US member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Revenue for Telecoms – Issues In-Depth | 9 1.1 In scope | 1 Scope Overview The new standard applies to contracts to deliver goods or services to a customer. However, if a contract, or part of a contract, is in the scope of other specific requirements, then it falls outside the scope of the new standard. For example, a lease would be in the scope of the leasing standards. This may apply to some equipment provided to customers in a telecom contract. Furthermore, some non-monetary exchanges may be outside the scope of the new standard, which could potentially apply to exchanges of airtime or network capacity. In some cases, the new standard will be applied to part of a contract or to a portfolio of contracts. The new standard provides guidance on when it should or may be applied to these circumstances and how to apply it. 1.1 In scope Requirements of the new standard 606-10-15-3 [IFRS 15.6] A ‘customer’ is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. Contract Goods and services Entity Customer Consideration Example 1 – In-scope arrangement Telco X is in the business of constructing networks and associated infrastructure for customers. Telco X enters into a contract with Company C to deliver a call center. This transaction is in the scope of the new standard, because Company C has entered into a contract to purchase an output of Telco X’s ordinary activities and is therefore considered a customer of Telco X. © 2016 KPMG LLP, a Delaware limited liability partnership and the US member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Home
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Revenue for Telecoms

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