The model for revenue recognition is changing with the Financial Accounting Standards Board’s (FASB) May 28, 2014, release of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU eliminates most of the existing industry-specific guidance and significantly expands revenue recognition disclosures. More than 600 pieces of current revenue recognition guidance are replaced with an overriding principle and a five-step model. The standard requires entities to make more estimates and use more judgment than under current guidance.
For public entities, the standard is effective for interim and annual reporting periods beginning after December 15, 2017. All other entities have an additional year for annual reports and two years for interim reporting.
How Can BKD Help?
- Develop transition plan
- Analyze technology, controls and processes
- Evaluate estimation process
- Analyze contract
- Assess overall business effect
- Identify required disclosures