IFRS 15: A critical evaluation of the newly issued revenue recognitions standard’s ability to reflect economic reality

Abstract: Purpose: The purpose of this study has been to critically evaluate the newly issued revenue recognition standard’s ability to reflect economic reality. Methodology: To fulfil the purpose of this study, a qualitative document analysis of how different wide-spread perceptions of economic reality have been accommodated by the IASB under the development of IFRS 15 has been conducted with a backdrop in the developed framework. Framework: The framework of this study entails an in-depth background to the new revenue recognition standard, IFRS 15, and the notions of the central accounting concepts used for the study. Empirical foundation: The empirical foundation in this study rests on four documents and one collection of received letters. These are described in further detail under section 2.3. Conclusions: During the standard-setting process of IFRS 15, different wide-spread perceptions of economic reality have, seemingly, been acknowledged by IASB. Different degrees and ways of accommodation, per area of critique, could be found. However, as the notion of economic reality is highly dependent on perceptions, and is frequently a subject of change, IFRS 15 ability to reflect economic reality is hard to adequately determine.