Implementing the New Revenue Recognition Standards Under ASC 606

Description

In 2014, the FASB in conjunction with the IASB issued new revenue recognition standard, titled Revenue From Contracts With Customers, which creates a new revenue recognition model for companies deriving revenue from contracts. Upon issuance, the new standard was initially effective for annual reporting periods beginning after December 15, 2016 (calendar year 2017) - for public companies, and annual reporting periods beginning after December 15, 2017 (calendar year 2018) - for non-public companies; however, due to the extreme complexity companies will face in adopting the new standard, the deadline has been pushed back by one year, with provisions for early adoption. The standard can be applied using either the full retrospective approach, or the modified retrospective approach, which determine the financial statement presentation of the cumulative effect on retained earnings from initially applying the standard.

The new standard introduces a principles-based, five-step model for determining when and how companies should recognize revenue. Both public and non-public companies will be impacted by the new standard. Most companies will experience some level of change, which will include additional estimates and judgements, new or revised business processes and controls, and expanded disclosure. The extent of the the impact will vary among companies, depending on the complexity of the transactions, and the industry in which they operate. The new standard will likely affect the company’s day-to-day accounting and could impact how companies conduct business with their contract customers.

Adopting the new standard will be challenging, and will require both strategic decisions and technical adjustments in the transition. It is imperative for companies to develop an appropriate implementation plan in order to successfully transition to the new standard. Failure to adhere to the new standard carries substantial risk of errors and compliance risks for companies, as well as their financial advisers.

Listen as our experienced panel provides a thorough briefing of the impending revenue recognition standard, and concrete guidance on how to implement an implementation plan to ensure impacted companies are prepared for ASC 606.