In revenue recognition for real estate operators, which statement best describes the difference between IFRS and US GAAP?

• A. Both rely on transfer of control; IFRS emphasizes variable consideration, contract costs, and significant judgments; US GAAP aligns with ASC 606 but with industry-specific variations.
• B. IFRS ignores variable consideration and uses a completed-contract method; US GAAP uses percentage-of-completion for all projects.
• C. IFRS and US GAAP are identical in revenue recognition for real estate operators.
• D. IFRS uses only historical cost, US GAAP uses fair value for revenue metrics.

Answer: (A)

Revenue recognition hinges on transfer of control and satisfaction of performance obligations. In real estate, you recognize revenue when the customer gains control of the promised asset or service, which can occur over time or at a point in time depending on contract terms. Under IFRS, IFRS 15 requires attention to variable consideration (such as price adjustments or incentives), costs to obtain and fulfill the contract (which may be capitalized if they meet the criteria), and the significant judgments involved in identifying performance obligations and when control passes. This means you assess how the contract’s terms affect the amount and timing of revenue, and you choose a method to measure progress toward satisfying each obligation that best depicts transfer of control.

US GAAP follows the same transfer-of-control framework under ASC 606, so the overall approach is aligned with IFRS. However, real estate contracts often involve industry-specific structures that US GAAP addresses with variations within ASC 606 guidance, reflecting typical deal forms, timing, and capitalization of certain costs. So the best description is that both rely on transfer of control, IFRS emphasizes variable consideration, contract costs, and significant judgments, while US GAAP aligns with ASC 606 but with industry-specific refinements.