Revenue and Expense

What is a Preliminary Views Document?

A Preliminary Views document lays out the Board’s early thinking on a given standards-setting area. These documents are used for projects that are complex. The Board issues Preliminary Views to seek stakeholder feedback on project issues at an early stage in the Board’s work to develop new standards. Continue to Full Project Information

Why did the GASB initiate this project?

The Board added this project to its technical agenda in the interest of:
  • Developing guidance applicable to topics for which existing guidance is limited,
  • Improving existing guidance that has been identified as challenging to apply,
  • Considering inclusion of a performance obligation approach in the GASB’s authoritative literature, and
  • Assessing existing and proposed guidance based on the conceptual framework.
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What does Board address in this Preliminary Views document?

The document contains Board proposals regarding the following topics:
  • The project’s objective and scope
  • Foundational principles for the model
  • Categorization
  • Revenue Recognition
  • Expense Recognition, and
  • Measurement.
Additionally, the Preliminary Views include application materials to assist stakeholders to better understand the overall model, presented as cases in Appendix C.

Furthermore, the Preliminary Views include application materials related to Board proposals addressing the short-term financial resources measurement focus and accrual basis of accounting presented in the Exposure Draft, Financial Reporting Model Improvements. Continue to Full Project Information

What would a new recognition model provide?

The comprehensive revenue and expense recognition model, as proposed by the Board, contains three components:
  1. Classification—identifying what type of transaction has occurred
  2. Recognition—determining when to report revenue or expense in the financial statements
  3. Measurement—determining how much revenue or expense to report in the financial statement. 
The classification component would enable stakeholders to better identify the type of transaction and therefore follow the appropriate recognition and measurement guidance for that transaction.
The Board introduced in the PV a new methodology for categorizing transactions, which is then used as a basis for applying recognition proposals. Determining the transaction category would be based on the assessment of specific characteristics of transactions in the scope of the project. This categorization methodology is intended to identify transactions with performance obligations.

If a transaction is determined to have a performance obligation the associated revenue or expense would be recognized based on the satisfaction of the performance obligation. For transactions that are determined not to have a performance obligation, the Board proposed specific recognition guidance based on the various subcategories of transactions (for example, derived taxes, such as income and sales taxes and imposed taxes, such as property taxes). Continue to Full Project Information

What does the GASB want to know?

The GASB relies on the comments of the people who prepare and audit financial statements to assess the appropriateness of potential approaches to addressing accounting and financial reporting issues. The users of financial information, on the other hand, help the GASB understand whether the information that would result from the proposals would be useful for fulfilling their need for governmental financial information.
The Board is seeking feedback from the public on all matters presented in the document. The substance of the comments from each of the GASB’s stakeholders is more important to the GASB’s deliberations than the total number of people for or against the proposals. Continue to Full Project Information

How can I share my views?

Stakeholders can express their opinions to the GASB is by written comments, which may be submitted by email to (please identify Project No. 4-6P). Comments should be submitted by February 26, 2021.

Stakeholders can also share their views with the Board at one of these upcoming public hearings or user forums in spring of 2021.

Deadlines and instructions for notifying the GASB of intent to participate in these can be found in the Preliminary Views.
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