Revenue recognition — the future is here

On May 28, the FASB and IASB issued their long-awaited converged standard on revenue recognition. Those closely following the project know there are potentially significant changes coming for certain industries, and some level of change for almost all entities. Below are some of the areas that could create the most significant challenges for entities as they transition to the new standard.

  • Changes in the timing of revenue recognition
  • Inclusion of variable consideration in the transaction price prior to resolution of contingencies
  • Allocation of transaction price based on standalone selling price
  • Determination of timing of revenue recognition for licenses of intellectual property
  • Consideration of time value of money
  • Capitalization of contract costs
  • Enhanced and additional disclosure requirements

This In brief article provides an overview of the new Revenue Recognition standard.