Engineering & Construction Contractors Revenue Recognition Task Force 


AICPA Revenue Recognition Task Forces are charged with developing revenue recognition implementation issues that will provide helpful hints and illustrative examples for how to apply the new Revenue Recognition Standard.

Task Force Members:

  • Mike Sobolewski, PricwaterhouseCoopers LLP (Co-Chair)
  • Tim Wilson, BKD LLP (Co-Chair)
  • John Armour, CBIZ
  • James Brant, Deloitte
  • Reed Brimhall, URS
  • Michael Desormeaux, Grant Thornton LLP
  • Bill Patt, Mortenson Construction
  • Erin Roberts, Ernst & Young LLP
  • Michael Samson, KPMG LLP
  • Geoff Sanders, Jacobs
  • Alison Spivey, Ernst & Young LLP
  • Louis Torres, BDO LL
  • Cynthia Vandenberg, Fluor
  • Darrin Weber, IMA 
  • John Weber, RSM US LLP
Staff Contact: Fred Gill, Frederick.Gill@aicpa-cima.com
IDENTIFIED REVENUE RECOGNITION IMPLEMENTATION ISSUES

 

Below is a list of potential revenue recognition implementation issues identified by the Engineering & Construction Contractors Revenue Recognition Task Force. The list will be updated as the task force continues it discussions. Full revenue recognition implementation issues will be posted below for informal comments after review by the AICPA Financial Reporting Executive Committee (FinREC).

The Task Force has removed and/or addressed selected implementation issues included in the original plan.

Issue # Description of Implementation Issue Status
1 Identifying the Unit of Account (including combining contracts, loss of segmentation guidance, options, separate performance obligations)
This implementation issue will discuss how to determine the unit of account for recognition of revenue and margin for engineering and construction contracts, including combining of contracts, segmenting of contracts, and identifying performance obligations.
Finalized and included in the AICPA Guide Revenue Recognition
2 Variable Consideration / Estimation Method (including claims, change orders (unpriced and unapproved), incentives, penalties, extras, liquidated damages, back charges, collectability)
This implementation issue will discuss what are the factors to consider in estimating the amount of variable consideration to which an entity will be entitled, and how an entity should determine the amount of estimated variable consideration to include in the transaction price.
Finalized and included in the AICPA Guide Revenue Recognition
3 Acceptable measures of progress (including when each measure is acceptable to use, Accounting for Service Contracts, Wasted Materials)
This implementation issue will discuss what are acceptable measures of progress for Engineering & Construction contracts that are performance obligations satisfied over time.
Finalized and included in the AICPA Guide Revenue Recognition
4 Uninstalled materials
This implementation issue will discuss whether the determination for model applicability is only required at the onset of the contract; whether the model applies to both inventoriable and non-inventoriable (i.e. – highly customized) materials; and how to account for such materials when installed (i.e., “day 2”).
Out for Exposure until October 2, 2017
4a Question to TRG - Uninstalled materials Question submitted to FASB TRG
5
Impact of Termination for Convenience on Contract Duration
This implementation issue will discuss the impact of Customer Termination Rights and Penalties on Contract Term in engineering and construction contracts.
Out for Exposure until August 1, 2017
6 Contract Costs
This implementation issue will discuss accounting for contract costs, include pre-contract costs and costs that qualify for capitalization.

Out for Exposure until December 1, 2017
7 Disclosures
This implementation issue will discuss considerations for preparing revenue recognition disclosures for engineering and construction entities
Out for Exposure until November 1, 2017


FEEDBACK REQUESTED

Draft Revenue Recognition Implementation Issues included for informal comment, when available, will be listed below.

Respondents should submit any comments including the implementation issue number to Frederick.Gill@aicpa-cima.com by the dates noted below:


Issue # Comment Due Date
4-4 - Uninstalled Materials October 2, 2017
4-5 - Impact of Termination for Convenience on Contract Duration August 1, 2017
 4-6 - Contract Costs  December 1, 2017
4-7 - Disclosures November 1, 2017


The Engineering & Construction Contractors Revenue Recognition Task Force recommends the following AICPA products for current revenue recognition issues:



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