Application Of New Revenue Standards In Telecom Industry And It’s Expected Impacts

Revenue plays an important role in enterprises and is one of the core indicators to evaluate business performance.However,there are various problems about current revenue standards.International financial reporting standards and US GAAP have defined different requirements for revenue recognition,which leads to the lack of comparability among different enterprises,industries and capital markets;in addition,with the industrial upgrading and business model innovation,revenue recognition in emerging industries and innovative business models has become an increasingly complex issue.In order to clarify and unify revenue recognition criteria,in May 2014,International Accounting Standards Board and Financial Accounting Standards Board jointly issued IFRS 15——revenue from contracts with customers.In order to maintain convergence with international accounting standards,China’s revenue standards have been revised accordingly.Revenue recognition theory is changed from revenue-expense view to asset-liability view,confirming revenue from the transaction form to the perspective of contract.The new revenue standards introduce a single revenue recognition model,and the transfer of control rights instead of the transfer of risk compensation as the judgment standard of revenue recognition point.This paper adopts three research methods:normative research,case study and comparative study.Taking China Mobile as an example,this paper discusses the application of new revenue standards,further analyzes the possible impacts of new revenue standards on the telecom industry and puts forward some suggestions for the accounting practice in China.Firstly,this article combs the main contents of new revenue standards,including the process of revising revenue standards,the differences between new revenue standards and current revenue standards,the steps of the new revenue model,main responsibility and the agent,etc.Secondly,introducing China Mobile as a case,this paper gives a brief introduction to services and product types currently provided by China Mobile and related revenue recognition and measurement.Then,this paper selects the types of common transactions and business types such as the terminal bundled business,business gifts fees,service charges and installation service,elaborates the accounting methods of current revenue standards and new revenue standards,and illustrates by examples.Next,this paper expounds the expected impacts of new revenue standard on the telecom industry from the aspects of revenue recognition point,marketing plans and terminal sales channels,information systems,differences between finance and tax and so on,and discusses the possible changes of the telecom enterprises in financial information,management and other aspects.Finally,make a summary and put forward some suggestions on the implementation and application of China’s new revenue standards from the perspective of enterprises and regulatory authorities.The paper indicates that new revenue standards will have a greater impact on the financial information for telecom enterprises,including accounting,financial indicators and so on.It may influence the management decisions by changing the marketing plans and terminal sale channels.In addition,it will also affect the evaluation index of company performance,internal control process,information systems and other management activities.