The deliberation is over: On May 28, 2014, the FASB and the IASB released their new standard for revenue recognition, to take effect in 2017 for public companies. The new guidance may constitute the biggest accounting change the world has seen in over a decade, because revenue recognition informs a wide array of business decisions. Technology companies that start preparing for the change now will be in the best position to seize the opportunities that will come with the change—while also surmounting the challenges.
Although the 2017 effective date for the new revenue recognition standard may seem far off, companies most affected by the change should start preparing now. For technology companies currently following US GAAP, the impact of the new standard will be especially notable. This is especially true for businesses in subsectors that have specialized guidance or industry practices, such as software and semiconductors. Like many huge changes, the standard will bring both opportunity and challenge.