Introduction It is important to appreciate the role played by revenue recognition in the preparation of financial statements. Considering the wide use of financial statements in the decision-making process, it is important to have a universally recognized mechanism in order to ensure consistency. Efforts have therefore been directed towards replacing the existing generally accepted accounting principles (GAAP) with a new accounting approach. The move is aimed at creating consistency in the preparations of financial statements regardless of the industry the business operates in. In addition, the new approach will significantly seek to reduce the many standards involved in the GAAP. This paper seeks to analyze contract revenue recognitions. The GAAP principles limitations The current GAAP principle is accused of vagueness in the standards descriptions. As a result, there have been a lot of variations in the financial records preparations. The variations are mainly attributed to different interpretations from the various industries, which have limited the external users of the financial statements in making-up their decisions. The critics also claim that the current GAAP principles have many standards which burden the users. The various principles also seem to have some similarities which further complicate the financial interpretations. The new approach therefore seeks to reduce this number to a considerable level and also maintain their clarity in order to ensure consistency and ease comparability between firms (FASB S2&S3). The board wishes to make some vital amendments to standards relating to non-financial contracts, insurance contracts and, lease contracts. This amendment will aim at ensuring similar revenue recognition models are used in every industry, thus improving their financial reporting. Similar firms will therefore use similar revenue recognition techniques in accounting for their contractual obligations. Such undertaking will also enhance comparability between different firms’ statements. It will also improve the decision usefulness of the information contained in the firms’ financial statements. In addition, the move will boost the decision usefulness of the financial information in the industry (FASB S11). The current GAAP principles are more complex, a quality that leads to interpretation variations. The board, therefore, seeks to simplify these principles which will, in turn, lead to quality financial reports. Therefore, people who depend on the financial statements in the decision-making will be at ease since the format, language and techniques used will be understandable (FASB 1.20). The proposed version emphasizes revenue recognition on an increased basis of net wealth emanating from the contract. All the transactions that add up the total revenue from the contract should therefore be recognized in the books of account. The board has also interpreted the contract further to comprise not only written but also implied agreement between parties. This move seeks to delimit the legal contractual obligation between parties, and also between firms. Indeed, the rights and obligations of the parties to contract should be well outlined in order to ensure conformity