Revenue Recognition Resources

The issuance of Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (ASU 606), establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Using a 5-step analysis, ASC 606 states that revenue recognition should be recognized as goods and services are transferred to the customers and should reflect the amount of consideration the entity expects to be owed in exchange for those goods or services.

Effective Dates

*Based on the applicable guidance, public business entities could include certain non-profits and employee benefit plans.

Implementation by calendar year-end public entities was required by January 1, 2018. For nonpublic entities, the new guidance is effective for annual reporting periods beginning after December 15, 2018.

To help address issues identified by entities during the implementation process, here are some available resources:

  • The standard allows for two methods of adoption: full retrospective and modified retrospective. Choosing an adoption method should consider the needs and requirements of the parent company, if applicable, and also the trend of companies operating in your industry.
  • For non-complex interpretations and contracts, the Center for Plain English (CPEA) has granted us permission to allow our clients to use their Revenue Recognition Contract Review Checklist (see sidebar) to assess, document, and conclude on the five-step analysis.
  • For more complex interpretations and contracts, our firm developed the Revenue Accelerator Checklist (see sidebar) to assess, document, and conclude on the five-step analysis.
  • FASB and IASB established the Joint Transition Resource Group (TRG), and the American Institute of Certified Public Accountants (AICPA) organized several industry-specific task forces to identify and provide guidance on implementation issues in specific industries. The TRG has discussed many implementation issues. While the TRG does not issue guidance, the FASB has provided a Topical Reference Guide: Questions discussed by the Transition Resource Group, which provides links to the relevant materials for each issue discussed.
  • AICPA industry-specific task forces’ activities. The AICPA has issued its Audit and Accounting Guide, Revenue Recognition, which is a nonauthoritative revenue recognition guide providing guidance on industry-specific implementation issues that has been and will continue to be updated as additional content is finalized. Additional information about the AICPA’s industry-specific task forces and its Revenue Recognition AAG can be found on its website.
  • Many new qualitative and quantitative disclosure requirements are included in the new standard. The objective of the disclosure requirements is to help financial statement users understand the nature, amount, timing and uncertainty of revenue and related cash flows. For entities that do not fall under the guidance for public entities, they may elect to not provide certain disclosures.

B&V Revenue Recognition Committee

Adam_Dimmick

Adam Dimmick

Audit Shareholder and Department Chair, CPA, CGMA
adimmick@bvccpa.com
713-353-1954

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Meresa Morgan

ERISA Practice & Audit Shareholder, CPA
meresa.morgan@bvccpa.com
713-353-1921

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jason Liu

Jason Liu

Audit Shareholder, CPA
jliu@bvccpa.com
713-366-8563
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HERNIE ANTONIO

Hernie Antonio

Audit Director, CPA
hantonio@bvccpa.com
713-366-8530

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Laura_Freudenberger

Laura Freudenberger

Audit Shareholder, CPA
lfreudenberger@bvccpa.com
713-353-1916

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Joe Alcorta

Audit Principal, CPA
jalcorta@bvccpa.com
713-353-1978

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Click Here to Access our Revenue Recognition Contract Review Checklist

Rev Rec Contract Review Checklist

Click Here to Access our Revenue Accelerator Checklist

Revenue Accelerator Checklist

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