BC4 In December 2008, the boards published for public comment the Discussion Paper Preliminary Views on Revenue Recognition in Contracts with Customers and received more than 200 comment letters in response. In the Discussion Paper, the boards proposed the general principles of a contract-based revenue recognition model with a measurement approach that was based on an allocation of the transaction price. That revenue recognition model was developed after extensive discussions by the boards on alternative models for recognising and measuring revenue (see paragraphs BC16-BC27).

BC5 Respondents to the Discussion Paper generally supported the objective of developing a comprehensive revenue recognition model for both IFRS and US GAAP. Most respondents also generally supported the recognition and measurement principles proposed in the Discussion Paper, which are the basic building blocks of the revenue recognition model. In particular, the Discussion Paper introduced the concepts that a contract contains performance obligations for the entity to transfer goods or services to a customer and that revenue is recognised when the entity satisfies its performance obligations as a result of the customer obtaining control of those goods or services.

BC6 Respondents to the Discussion Paper were mainly concerned about the following proposals:

(a) identifying performance obligations only on the basis of the timing of the transfer of the good or service to the customer. Respondents commented that this would be impractical, especially when many goods or services are transferred over time to the customer (for example, in construction contracts).