BC2 IFRS 15 and Topic 606 are the result of the IASB's and the FASB's joint project to improve the financial reporting of revenue under International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (US GAAP). The boards undertook this project because their requirements for revenue needed improvement for the following reasons:

(a) US GAAP comprised broad revenue recognition concepts and detailed guidance for particular industries or transactions, which often resulted in different accounting for economically similar transactions.

(b) the previous revenue Standards in IFRS had different principles and were sometimes difficult to understand and apply to transactions other than simple ones. In addition, IFRS had limited guidance on important topics such as revenue recognition for multiple-element arrangements. Consequently, some entities that were applying IFRS referred to parts of US GAAP to develop an appropriate revenue recognition accounting policy.

(c) the disclosures required under both IFRS and US GAAP were inadequate and often did not provide users of financial statements with information to sufficiently understand revenue arising from contracts with customers.

BC3 IFRS 15 and Topic 606 [Unless indicated otherwise, all references to IFRS 15 in this Basis for Conclusions can be read as also referring to Topic 606.] eliminate those inconsistencies and weaknesses by providing a comprehensive revenue recognition model that applies to a wide range of transactions and industries. The comprehensive model also improves previous IFRS and US GAAP by: