Revenue recognition

The FASB and IASB issued Revenue from contracts with customers, their long-awaited converged standard on revenue recognition on May 28, 2014. Those closely following the revenue project know there are potentially significant changes coming for certain industries, and some level of change for almost all entities.

Key developments in Revenue recognition

Below are some of the areas that could create the most significant challenges for entities as they transition to the new revenue recognition 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

What's next for Revenue recognition?

The revenue recognition standard, Revenue from contracts with customers, will be effective for U.S. GAAP reporters for the first interim period within annual reporting periods beginning after December 15, 2016 for public entities and after December 15, 2017 for non-public entities, with no early adoption permitted. The revenue standard will be effective for IFRS reporters for the first interim period within annual reporting periods beginning on or after January 1, 2017, and will allow early adoption, with no delay in effective date for non-public entities.

 

Accounting guide

Revenue from contracts with customers - 2014 global accounting and financial reporting guide

8/11/14 | Assurance services

Our global accounting and financial reporting guide describes the accounting for revenue from contracts with customers under the converged U.S GAAP and IFRS revenue standard (ASC 606) issued in May 2014. It has been prepared to support entities as they identify the implications of the new revenue recognition standard, evaluate its impact (on business strategies, processes, systems, controls, financial statement recognition and required disclosures) and prepare for implementation. Read more