The Impact of the Revenue Recognition Project
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I examined the impact of the revenue recognition project, which was produced jointly by the Financial Accounting Standards Board and the International Accounting Standards Board as a way to improve the current accounting guidelines. I determined that, when implemented, the proposed standard would impact entities in three different ways. First, entities would incur implementation costs. Second, entities may restructure their business practices in response to the standard. Third, financial statement changes would occur for some entities. Specifically, I estimated that airline revenue would decrease by approximately 10% in the year the proposed standard is implemented because of the deferral of revenue from frequent flyer programs. These estimated impacts are due to the substantial differences between current United States Generally Accepted Accounting Principles and the proposed guidance in the revenue recognition project. The findings in this thesis suggest that some entities will need to prepare for the substantial changes associated with the implementation of the revenue recognition project.