Revenue recognition

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.

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 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 standard 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 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.

 

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The FASB and IASB have issued their long-awaited converged standard on revenue recognition -- how will you be affected? Accompanying this In depth are industry-specific supplements with examples and further insights into ways entities within the industry are likely to be affected by the revenue standard. Industry supplements are available for (1) aerospace & defense, (2) automotive, (3) communications, (4) engineering & construction, (5) entertainment & media, (6) industrial products/manufacturing, (7) pharmaceuticals, and (8) retail & consumer. Additional supplements will be released over the coming weeks. Read more

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