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Revenue from Contracts with Customers

Revenue from Contracts with Customers: The New ASC Topic 606

FASB's ASU No. 2014-09 - Revenue from Contracts with Customers (Topic 606) is effective for public entities annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. For all other entities, it is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. While this may seem like a long-ways off, companies should act now to prepare for this important transition. Topic 606 will bring changes to 100% of entities on US GAAP, at least from a disclosure standpoint. Learn precisely what is changing and how it will impact your company. Topics covered include:

  • Scope and objectives of ASC 606 
  • The core principle and how it varies from current US GAAP
  • Detailed review of challenges within the 5-steps for recognizing revenue:
    1. Identifying contracts with the customer (606-10-25-1)
    2. Identify separate performance obligations within the contract (606-10-25-14)
    3. Determining the transaction price (606-10-32-2)
    4. Allocate the transaction price to the various performance obligations (606-10-32-28)
    5. Recognize revenue when (or as) the various performance obligations are satisfied (606-10-25-23)
  • Required contract criteria
  • Dealing with collectability
  • Identifying and analyzing distinct types of company revenue
  • Combining contracts and contract modifications
  • Understanding distinct goods and services
  • Fixed and variable transaction price considerations
  • Treatment of significant financing aspects
  • Allocating discounts
  • Understanding control factors to recognize revenue and designing new internal controls over financial reporting (ICFR)
  • Coordination between the new revenue recognition standard and the new lease accounting standard
  • Disclosure requirements
  • Incremental costs of obtaining a contract
  • Transition guidance
  • Development of a transition plan
  • Industry guidance from the AICPA

This is a critical topic for all organizations compiling their financial statements in accordance with US GAAP.  Financial and accounting management, staff, audit committee members, and auditors can all benefit in learning the latest developments and guidance to help pave the way towards a smooth transition.

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