Revenue from Contracts with Customers
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.
Subsequent ASUs and FASB Staff Papers
Subsequent to the release of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), FASB issued the following related accounting standard updates and Staff papers:
- Update 2015-14 - Deferral of the Effective Date
- Update 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)
- Update 2016-10 – Identifying Performance Obligations and Licensing
- Update 2016-11 – Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update)
- Update 2016-12 – Narrow-Scope Improvements and Practical Expedients
- Update 2016-20 - Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers
- Update 2017-13—Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update)
- Update 2017-14—Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606) (SEC Update)
New Resources
The Financial Accounting Standards Board (FASB) has launched a new webpage, Implementing New Standards that addresses why and when the FASB positions organizations for a successful and smooth transition to new financial accounting and reporting standards.
The AICPA has developed the following new resources for understanding and implementing the new standard.
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:
- Understand the changes to current GAAP based on FASB ASU 2014-09, Revenue from Contracts with Customers
- Understand transition and retrospective adoption of the revenue recognition standard, and determine how your company will adopt the new guidance
- Find resources to help train your professional staff to ensure effective and efficient implementation of the revenue recognition standard
- 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:
- Aerospace and Defense
- Airlines
- Asset Management
- Broker-Dealers
- Construction Contractors
- Depository Institutions
- Gaming
- Health Care
- Hospitality
- Insurance
- Not-for-Profit
- Oil and Gas
- Power and Utility
- Software
- Telecommunications
- Timeshare
Download a summary of current issues and their status.
AICPA Resources - Publications, Webcasts and CPE
The AICPA has the following titles under production:
AICPA Audit and Accounting Guide Revenue Recognition
This guide includes general accounting and auditing information to be considered when implementing the new revenue recognition standard as well as industry-specific considerations.
PCPS Revenue Recognition Toolkit – COMING SOON
- PDF (free for PCPS Members)
- PDF (paid for non-PCPS members)
Webcasts and CPE courses available or under production.
Webcast (free, no cpe archive)
- Understanding the New Revenue Recognition Standard
- FASB ASC 606 – Revenue Recognition: Asset Management Entities
- FASB ASC 606 – Revenue Recognition: Software Entities
- FASB ASC 606 – Revenue Recognition: Engineering and Construction Entities
- FASB ASC 606 – Revenue Recognition: Telecommunications Entities
Webcast
- CPE - Revenue Recognition: Mastering the New FASB Requirements
- CPE - Interpreting the New Revenue Recognition Standard: What All CPAs Need to Know
Self-Study: On-demand - CPE - Revenue Recognition: Mastering the New FASB Requirements
Self-Study: On-demand - CPE – IFRS 15 – Revenue Recognition
Self-Study: On-demand
