Appendix A — Differences Between U.S. GAAP and IFRS Accounting Standards

Although the FASB’s guidance on revenue from contracts with customers is nearly fully converged with that of the IASB, there are differences between U.S. GAAP and IFRS Accounting Standards on revenue-related topics. Some of those differences are reflected in the table below.

Topic	U.S. GAAP	IFRS Accounting Standards
Step 1 — the collectibility threshold for contracts	The guidance establishes a probable collectibility threshold, meaning likely to occur.1	The guidance establishes a probable collectibility threshold, meaning more likely than not.2
Reversal of impairment losses	An entity cannot reverse an impairment loss on capitalized costs to obtain or fulfill a contract.	An entity is required to reverse an impairment loss on capitalized costs to obtain or fulfill a contract if the impairment conditions no longer exist or have improved.
Interim disclosures	In addition to those required by ASC 270, an entity must provide interim disclosures about each of the following: The disaggregation of revenue. Contract asset and contract liability balances and significant changes in those balances. The transaction price allocated to the remaining performance obligations.	IFRS 15 amended IAS 34 to require an entity to provide interim disclosures about the disaggregation of revenue.
Requirements for nonpublic entities	The guidance applies to nonpublic entities, with some specific relief related to disclosure. Refer to Chapter 16 for additional information.	The guidance applies to all entities reporting under IFRS Accounting Standards, including nonpublic entities.

After the FASB and IASB issued ASU 2014-09 and IFRS 15, respectively, the boards decided to amend certain aspects of the revenue standard. In some cases, the amendments retained convergence; in other cases, however, the FASB decided on a solution that differs from the IASB’s. The table below outlines some additional differences between U.S. GAAP and IFRS Accounting Standards that have arisen as a result of the amendments.

Topic	U.S. GAAP	IFRS Accounting Standards
Licensing — determining the nature of an entity’s promise (see paragraphs BC51 through BC65 of ASU 2016-10)	An entity’s determination of whether a license is a right to use (for which revenue is recognized at a point in time) versus a right to access (for which revenue is recognized over time) is based on its classification of the intellectual property (IP) underlying the license as either functional or symbolic.	An entity’s determination of whether a license is a right to use versus a right to access is based on whether the customer can direct the use of, and obtain substantially all of the benefits from, the license at the point in time at which the license is granted. The customer can direct the use of, and obtain substantially all of the benefits from, the license if the underlying IP is not significantly affected by the entity’s ongoing activities.
Licensing — renewals (see paragraphs BC48 through BC50 of ASU 2016-10)	The amendment specifies that a renewal or extension is subject to the “use and benefit” guidance in ASC 606-10-55-58C, the application of which will generally result in revenue recognition at the beginning of the renewal period.	The “use and benefit” guidance does not explicitly refer to renewals. Consequently, revenue may be recognized earlier than it would be under U.S. GAAP.
Shipping and handling activities (see paragraphs BC19 through BC25 of ASU 2016-10)	The amendment provides an accounting policy election that permits an entity to account for shipping and handling activities that occur after the customer has obtained control of the related good as a fulfillment expense.	IFRS 15 does not provide an accounting policy election. If an entity performs shipping and handling services after the customer has obtained control of the related good, the shipping and handling activities will typically be accounted for as a separate performance obligation.
Noncash consideration (see paragraphs BC36 through BC43 of ASU 2016-12)	Under the amendments in ASU 2016-12, noncash consideration is measured at contract inception.	IFRS 15 does not prescribe a measurement date for noncash consideration.
Presentation of sales (and other similar) taxes (see paragraphs BC29 through BC35 of ASU 2016-12)	The amendment provides an accounting policy election that permits an entity to exclude all sales (and other similar) taxes from the measurement of the transaction price.	IFRS 15 does not provide an accounting policy election. An entity is required to identify whether it has a primary responsibility to pay the taxes or is acting only as a collection agent. If it is the primary obligor, it must include those taxes in the transaction price.
Provisions for losses on construction-type and production-type contracts	ASU 2016-20 amends the legacy guidance in ASC 605-35-25-47 to clarify that provisions for losses on construction-type and production-type contracts may be determined at either the contract or performance obligation level.	In accordance with IAS 37, the onerous test should be performed at the contract level.
Private-company franchisor	ASU 2021-02 allows a franchisor that is not a public business entity (a “private-company franchisor”) to use a practical expedient when identifying performance obligations in its contracts with customers (i.e., franchisees) under ASC 606. When using the practical expedient, a private-company franchisor that has entered into a franchise agreement would treat certain preopening services provided to its franchisee as distinct from the franchise license. In addition, a private-company franchisor that applies the practical expedient must make a policy election to either (1) apply the guidance in ASC 606 to determine whether the preopening services that are subject to the practical expedient are distinct from one another or (2) account for those preopening services as a single performance obligation. The practical expedient and policy election are intended to reduce the cost and complexity of applying ASC 606 to preopening services associated with initial franchise fees.	IFRS Accounting Standards do not include a similar practical expedient.
Disclosure of remaining performance obligations	ASU 2016-20 provides entities with an optional exemption from the requirement to disclose information about remaining performance obligations (ASC 606-10-50-13) for variable consideration if either (1) the variable consideration is a sales- or usage-based royalty promised in exchange for a license of IP or (2) the variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation.	IFRS 15 was not amended to provide similar disclosure relief.
Consideration payable to a customer — share-based payments to customers	ASU 2019-08 clarifies the accounting for share-based payments to customers and requires the application of ASC 718 for measurement and classification purposes (e.g., share-based consideration payable to a customer is calculated by using its fair-value-based measure as of the grant date).	IFRS 15 does not specify whether equity instruments granted by an entity to a customer are a type of consideration paid or payable to a customer. Further, IFRS 15 does not address how equity instruments granted to a customer in a revenue arrangement should be accounted for with regard to initial and subsequent measurement. Therefore, an entity should consider which standard (e.g., IFRS 2, IFRS 15, IAS 32), or combination of standards, could be applicable.

Further, some of the boards’ respective amendments to the revenue standard are generally expected to produce similar outcomes under U.S. GAAP and IFRS Accounting Standards despite differences between the FASB’s wording and that of the IASB. The table below provides examples of differently articulated but similar guidance under U.S. GAAP and IFRS Accounting Standards, as amended.

Topic	U.S. GAAP	IFRS Accounting Standards
Collectibility — criterion explanation and examples (see paragraphs BC9 through BC20 of ASU 2016-12)	ASU 2016-12 provides an additional explanation of the collectibility threshold’s objective, as well as implementation guidance and examples.	No additional guidance provided.
Collectibility — recognition criterion for contracts that fail step 1 (see paragraphs BC21 through BC28 of ASU 2016-12)	ASU 2016-12 adds a third criterion to allow revenue recognition when a contract fails step 1 (ASC 606-10-25-1).	Additional criterion not provided.
Immaterial goods or services (see paragraphs BC8 through BC18 of ASU 2016-10)	When identifying performance obligations, an entity is not required to assess immaterial items in the context of the contract as promised goods or services.	Overall materiality considerations should be used in the evaluation of items under IFRS Accounting Standards.
Licensing — when to consider the nature of an entity’s promise in granting a license (see paragraphs BC66 through BC69 of ASU 2016-10)	ASU 2016-10 contains explicit guidance to indicate that when a bundle of goods or services is determined to be a single performance obligation that includes a license of IP, an entity should apply the license implementation guidance to determine whether revenue related to the performance obligation should be recognized over time (including an appropriate measure of progress) or at a point in time.	No guidance added to IFRS 15; however, the Basis for Conclusions on IFRS 15 explains that the licensing implementation guidance does not override the general model — specifically, the requirements for identifying performance obligations before applying the criteria to determine the nature of an entity’s promise in granting a license.
Licensing — contractual restrictions (see paragraphs BC41 through BC47 of ASU 2016-10)	ASU 2016-10 contains explicit guidance to indicate that contractual provisions that explicitly or implicitly require an entity to transfer control of additional goods or services to the customer (e.g., additional rights) should be distinguished from contractual provisions that define attributes of a single promised license (e.g., restrictions of time or geography).	No guidance added to IFRS 15; however, the Basis for Conclusions on IFRS 15 explains that the license implementation guidance does not override the general model — specifically, the requirements for identifying performance obligations before applying the criteria to determine the nature of an entity’s promise in granting a license.
Licensing — hosting arrangements (see paragraph BC37 of ASU 2016-10)	ASU 2016-10 contains explicit guidance to indicate that the license implementation guidance is not applicable to software subject to a hosting arrangement that does not contain a license in accordance with the guidance in ASC 985-20-15-5.	No guidance added to IFRS 15; however, the Basis for Conclusions on IFRS 15 explains that the license implementation guidance does not override the general model — specifically, the requirements for identifying performance obligations before applying the criteria to determine the nature of an entity’s promise in granting a license.
Contract costs — impairment testing	ASU 2016-20 clarifies that when an entity tests capitalized contract costs for impairment, it should (1) consider expected contract renewals and extensions and (2) include any amount of consideration not yet recognized as revenue (i.e., consideration already received and amounts expected to be received in the future).	No additional guidance provided on specific factors that an entity should consider when testing capitalized contract costs for impairment.
Disclosure of prior-period performance obligations	ASU 2016-20 provides additional guidance to clarify that the disclosure of revenue from performance obligations satisfied (or partially satisfied) in prior periods applies to all performance obligations (i.e., the disclosure is not isolated to performance obligations with corresponding contract liability balances).	No additional guidance provided.
Contract modifications example	ASU 2016-20 amends Example 7 in ASC 606-10-55-125 through 55-128 to better align the wording with the contract modification guidance in ASC 606-10-25-10 through 25-13.	No amendments made to Example 7 in IFRS 15.
Contract asset versus receivable	ASU 2016-20 amends Example 38, Case B, in ASC 606-10-55-285 and 55-286 to provide a better link between the analysis and the receivables presentation guidance in ASC 606.	No amendments made to Example 38, Case B, in IFRS 15.
Refund liability	ASU 2016-20 amends Example 40 in ASC 606-10-55-293 to remove the reference to a contract liability as related to refund liabilities.	No amendments made to Example 40 in IFRS 15.

In addition, there are certain differences between legacy U.S. GAAP and IFRS Accounting Standards. While certain of the boards’ respective amendments — especially the FASB’s amendments in ASU 2016-20 — are not expected to create a new difference between U.S. GAAP and IFRS Accounting Standards, these amendments are also not expected to result in convergence between U.S. GAAP and IFRS Accounting Standards. The table below provides examples of where existing differences have been carried forward under the revenue standard.

Topic	U.S. GAAP	IFRS Accounting Standards
Onerous contracts	Although the guidance is silent on the topic of onerous contracts, it does not supersede existing provisions in other ASC subtopics, including ASC 605-20, ASC 605-35, and ASC 985-20, that require the recognition of losses for certain types of contracts with customers.	Under IAS 37, losses are recognized for all onerous contracts with customers.
Financial guarantee contracts	ASU 2016-20 clarifies that guarantee fees (other than product or service warranties) within the scope of ASC 460 are not within the scope of ASC 606.	In accordance with IFRS 9, the issuer of a financial guarantee contract should initially recognize the contract at fair value and subsequently measure it at the higher of (1) the amount of the loss allowance determined in accordance with IFRS 9 or (2) the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with IFRS 15.
Contract costs — interaction of impairment testing with guidance in other ASC topics	ASU 2016-20 clarifies that impairment testing on assets should be performed in the following order: (1) assets not within the scope of ASC 340, ASC 350, or ASC 360; (2) assets within the scope of ASC 340 (including contract costs capitalized under ASC 340-40); (3) asset groups and reporting units within the scope of ASC 360 and ASC 350.	Under IFRS 15, before an entity recognizes any impairment loss for a capitalized contract cost, it should recognize any impairment loss for assets related to the contract that are recognized in accordance with another IFRS Accounting Standard (e.g., IAS 2, IAS 16, or IAS 38). The resulting carrying amount of the asset should be included in the carrying amount of the cash-generating unit to which it belongs when IAS 36 is applied.
Scope of the revenue standard	ASU 2016-20 clarifies that all contracts within the scope of ASC 944 are not within the scope of ASC 606 by removing the term “insurance” from ASC 606-10-15-2(b).	IFRS 15 as originally issued excludes insurance contracts within the scope of IFRS 4 (or IFRS 17 when adopted) from the scope of IFRS 15.
Advertising costs	ASU 2016-20 reinstates the guidance on the accrual of advertising costs that was previously in ASC 340-20 and superseded by ASU 2014-09. The reinstated guidance is in ASC 720-35.	No additional guidance provided.
Cost capitalization for advisers to private funds and public funds	ASU 2016-20 amends the guidance in ASC 946-720 to align the cost capitalization guidance for advisers to both public and private funds.	IFRS Accounting Standards do not contain prescriptive guidance on the accounting for costs incurred by advisers to public and private funds.
Fixed-odds wagering contracts in the casino industry	ASU 2016-20 clarifies that fixed-odds wagering contracts in the casino industry should be accounted for under the revenue standard by providing in ASC 924-815 (added by the ASU) a scope exception to the derivatives guidance.	The IFRS Interpretations Committee previously noted that when a gaming entity takes a position against a customer, the resulting unsettled wager is a financial instrument that is likely to meet the definition of a derivative and should therefore be accounted for under IAS 39 (or IFRS 9, if adopted). At the November 2015 TRG meeting, the IASB commented that wagering contracts that meet the definition of a financial instrument within the scope of IAS 39 or IFRS 9 are excluded from the scope of IFRS 15.