REVENUE RECOGNITION
  OVERHAUL OF REVENUE RECOGNITION

 

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have issued a converged standard on the recognition of revenue from contracts with customers. The converged standard affects any organization that enters into contracts with customers to transfer goods or services, unless those contracts are covered by a different standard (for example – leases or insurance contracts).

 

These new standards will require significant planning and financial data and system analysis to ensure that revenue is reported and disclosed accurately.

 

WHAT YOU NEED TO KNOW  

 

The converged standard can be found under FASB Accounting Standards Codification Topic 606 (ASC 606) for entities following generally accepted accounting principles (GAAP), and International Financial Reporting Standards 15 (IFRS 15) for entities following international financial reporting standards (IFRS).

 

The converged standard requires companies to apply the following steps when recognizing revenue with customers.

 

     
  Step 1: Identify the contract(s) with a customer
  Step 2: Identify the performance obligations in the contract
  Step 3: Determine the transaction price
  Step 4: Allocate the transaction price to the performance obligations in the contract
  Step 5: Recognize revenue when (or as) the company satisfies a performance obligation
   

 

Each step contains complexities that will require the accounting and finance departments of financial statement issuers to gain an understanding of the relevant codification.

 

 

Effective Dates:

 

For public entities, certain not-for-profit entities, and certain employee benefit plans following GAAP:   Annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017
All entities other than those listed above following GAAP:   Annual reporting periods beginning after December 15, 2018 and interim reporting periods within annual reporting periods beginning after December 15, 2019
Entities following international accounting standards:   Annual reporting periods beginning after January 1, 2018

 

 

 

See “Beyond the GAAP” newsletter is published by Mazars.

 

 

 

 

Kathryn A. Byrne | Partner
  212.375.6770
  Kathryn.Byrne@mazarsusa.com
  Detailed profile
 

 

REVENUE RECOGNITION

OVERHAUL OF REVENUE RECOGNITION




OVERHAUL OF REVENUE RECOGNITION

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have issued a converged standard on the recognition of revenue from contracts with customers. The converged standard affects any organization that enters into contracts with customers to transfer goods or services, unless those contracts are covered by a different standard (for example – leases or insurance contracts).

 

These new standards will require significant planning and financial data and system analysis to ensure that revenue is reported and disclosed accurately.

 

WHAT YOU NEED TO KNOW  

 

The converged standard can be found under FASB Accounting Standards Codification Topic 606 (ASC 606) for entities following generally accepted accounting principles (GAAP), and International Financial Reporting Standards 15 (IFRS 15) for entities following international financial reporting standards (IFRS). 

The converged standard requires companies to apply the following steps when recognizing revenue with customers.

 

     
  Step 1: Identify the contract(s) with a customer
  Step 2: Identify the performance obligations in the contract
  Step 3: Determine the transaction price
  Step 4: Allocate the transaction price to the performance obligations in the contract
  Step 5: Recognize revenue when (or as) the company satisfies a performance obligation
   

 

Each step contains complexities that will require the accounting and finance departments of financial statement issuers to gain an understanding of the relevant codification.

 

 

Effective Dates:  

For public entities, certain not-for-profit entities, and certain employee benefit plans following GAAP:   Annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017
All entities other than those listed above following GAAP:   Annual reporting periods beginning after December 15, 2018 and interim reporting periods within annual reporting periods beginning after December 15, 2019
Entities following international accounting standards:   Annual reporting periods beginning after January 1, 2018

 

 

Kathryn A. Byrne | Partner
  212.375.6770
  Kathryn.Byrne@mazarsusa.com
  Detailed profile