The FASB and IASB have issued their long-awaited converged standard on revenue recognition -- how will you be affected? Accompanying this comprehensive In depth are the following industry-specific supplements with examples and further insights into ways entities within the industry are likely to be affected by the revenue standard: (1) aerospace & defense, (2) asset management, (3) automotive, (4) communications, (5) engineering & construction, (6) entertainment & media, (7) health care, (8) industrial products/manufacturing, (9) insurance intermediary, (10) mining, (11) pharmaceuticals, (12) real estate, (13) retail & consumer, (14) technology, and (15) utilities.
The FASB and IASB issued their long-awaited converged standard on revenue recognition on May 28, 2014. Almost all entities will be affected to some extent by the significant increase in required disclosures. But the changes extend beyond disclosures, and the effect on entities will vary depending on industry and current accounting practices. Entities will need to consider changes that might be necessary to information technology systems, processes, and internal controls to capture new data and address changes in financial reporting.
The objective of the revenue standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized.
This In depth summarizes the new revenue recognition model. The boards have established a joint Transition Resource Group (TRG) to aid entities transitioning to the new standard. We encourage entities to use this document as a guideline and monitor developments discussed by the TRG and the boards during the transition period.
Accompanying this In depth is an initial release of industry-specific supplements with examples and further insights into ways entities within the industry are likely to be affected by the revenue standard. Additional supplements will be released over the coming weeks.