A guide to revenue recognition assists middle-market companies in applying the new revenue recognition model in Topic 606, “Revenue from Contracts with Customers,” of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC). ASC 606 provides a robust framework for recognizing revenue, and upon its effective date, replaces almost all previously existing revenue recognition guidance, including industry-specific guidance, in U.S. generally accepted accounting principles (legacy GAAP).
Our comprehensive guide includes in-depth discussion and numerous examples on:
- All the important aspects of ASC 606, including its scope, five-step revenue recognition model, and presentation, disclosure, effective date and transition requirements
- The related new guidance in:
- ASC Subtopic 340-40, “Other Assets and Deferred Costs – Contracts with Customers"
- ASC Subtopic 610-20, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets”
- Commonly asked questions that arise in practice
- Significant differences between the new guidance and legacy GAAP to help in understanding how revenue recognition is changing
For a condensed discussion of the important concepts in ASC 606, refer to the executive summary in the guide.
While the effective dates for the new guidance are staggered, they are now upon us. With limited exceptions, the new guidance was effective as of January 1, 2018 for public entities with calendar year ends. For all nonpublic entities with calendar year ends, the new guidance is effective in the year ending December 31, 2019. Time is of the essence for these entities given that implementation of the new guidance could represent a significant undertaking in many cases. The guide can be a valuable tool in the implementation process to help understand and apply ASC 606 to your existing revenue streams, and post-implementation, to help apply ASC 606 to new and changing revenue streams.