Revenue Recognition

    On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. This standard has the potential to affect every entity’s day-to-day accounting and, possibly, the way business is executed through contracts with customers.


    Deferral of Effective Date

    At the April 1, 2015 FASB meeting, the Board proposed to defer the effective date of the new revenue standard by one year. A final decision will be made after a 30 day exposure period.

    As a result, public entities would apply the new revenue standard to annual reporting periods beginning after December 15, 2017. Nonpublic entities would apply the new revenue standard to annual reporting periods beginning after December 15, 2018.

    Public entities would apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2017 (that is, a public entity would be required to apply the new revenue standard beginning in the first interim period within the year of adoption). Nonpublic entities would apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2019 (that is, a nonpublic entity would not be required to apply the new revenue standard in interim periods within the year of adoption).

    The Board decided to permit both public and nonpublic entities to adopt the new revenue standard early, but not before the original public entity effective date (that is, annual periods beginning after December 15, 2016). A public entity would apply the new revenue standard to all interim reporting periods within the year of adoption. A nonpublic entity would not be required to apply the new revenue standard in interim periods within the year of adoption.

    The Board will expose a proposed Accounting Standards Update on the deferral of the effective date with a 30-day comment period.

    New Resources 

    The AICPA has developed the following new resources for understanding and implementing the new ASU.

    Financial Reporting Brief: Tax Effects of ASU 2014-09


    This Financial Reporting Brief acknowledges that this standard will have a large impact on the financial reporting standards of almost every company (public, private, and not-for-profit). But, what tax consequences could also result? The brief examines this question.

    Financial Reporting Brief: Roadmap to Understanding the New Revenue Recognition Standards

    The Financial Reporting Brief reorganizes the guidance contained in FASB ASC 606 (revenue recognition standard), to follow the five step revenue recognition model along with other guidance impacted by this standard. Additionally, it highlights differences between FASB ASC 606 and IFRS 15, and provides reference to applicable examples in the implementation guidance.

    New Revenue Recognition Accounting Standard—Learning and Implementation Plan

    Use this roadmap to ensure that your company as well as its management team and staff do the following:
    1. Understand the changes to current GAAP based on FASB ASU 2014-09, Revenue from Contracts with Customers
    2. Understand transition and retrospective adoption of the revenue recognition standard, and determine how your company will adopt the new guidance
    3. Find resources to help train your professional staff to ensure effective and efficient implementation of the revenue recognition standard
    4. Educate users about the changes they can expect in your company’s financial statements

    Brief: Revenue Recognition Primer for Audit Committees

    Because the revenue recognition standard will eliminate the transaction- and industry-specific revenue recognition guidance included in current GAAP and replace it with a principle-based approach, it is important for audit committees to gain an understanding of the standard and how it may impact the entity’s revenue recognition. This document will assist audit committees in ensuring the entity is prepared to adopt the standard.

    Industry Task Forces 

    The AICPA has formed sixteen industry task forces to help develop a new Accounting Guide on Revenue Recognition that will provide illustrative examples for how to apply the new Revenue Recognition Standard. The industries involved with this project are:

    The status of select revenue recognition issues identified by the task forces is available for download.

    Introduction to the New Revenue Recognition Standard 

    Kim Kushmerick, AICPA Senior Technical Manager-Accounting Standards, provides an overview of the new revenue recognition standard and highlights helpful AICPA resources available.

    More on AICPA TV

    AICPA Publications 

    The AICPA has the following titles under production.

    AICPA Resources - Webcasts and CPE 

    The AICPA has the following webcasts and CPE available or under production.

    Conference Learning

    The AICPA conducts conferences around the country. The following conferences will have dedicated sessions surrounding revenue recognition:
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