If you think you have a lot of time to implement the new revenue recognition standard, you don’t! While revenue may still be recognized under the old standards through December 31, 2018, disclosure will be required about the effects of the January 1 adoption. This disclosure will be expected to be fairly substantive, since the effective date of the adoption is prior to issuance of the financial statements.
The accounting standard for Recognition of Revenue from Contracts with Customers (ASC 606) was issued by the FASB on May 14, 2014. The implementation date for private companies is at hand having been set for reporting periods beginning after Dec 15, 2018. The implementation date for public companies was set for a year earlier.
In essence, the core principle is that an entity must view a contract as a set of distinct obligations, pricing each of the obligations and recognizing revenue when, or as, the obligations are fulfilled. Here is a link to a summary article we wrote last year. In addition, here is a link to the new accounting standard.
CFO Consulting Partners is experienced with implementing complex accounting standards, including the one on revenue recognition. Let us bring our expertise to your 2018 disclosure requirement, and to your 2019 implementation. Don’t delay! Time is of the essence!
by Oliver Brooks, Director, CFO Consulting Partners