By: Brynn McNeil, Partner Revenue is critically important in the financial statements of companies. Thus, revenue recognition remains a priority for regulators and the accounting profession as a whole. Implementing the new revenue recognition standard, Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, will likely be the most significant and comprehensive change in many years for most companies. The core principle of FASB ASC 606 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for. Read More.
Topics: Accounting Standards Codification, Accounting Standards Update, AICPA, AICPA Audit & Accounting Guide, American Institute of Certified Public Accountants "AICPA", FASB, Financial Accounting Standards Board "FASB", Revenue Recognition
FASB to Revisit Segment Reporting Standard
As investors and analysts’ frustrations continue over segment reporting, the Financial Accounting Standards Board (“FASB”) plans to improve the consistency and application of its guidance. The FASB wants to amend Accounting Standards Codification (“ASC”) 280, Segment Reporting, which requires businesses to disclose information regarding management’s decision-making process and methods for reviewing segment performance. The standard also lists disclosure requirements on products and services, geographic regions, and a company’s top customers. Investors complain that the standard’s disclosure requirements can be excessively wide-ranging. They also say that the current guidance forces companies to group too many operating units, which makes it difficult. Read More.
FASB to Review Revenue Standard Implementation Costs
The Financial Accounting Standards Board (“FASB”) plans to examine how companies implement its revenue recognition standard when the guidance goes into effect next year. At a December 14 meeting, FASB Chairman Russell Golden stated that the board would undertake a comprehensive review of Accounting Standards Codification 606, Revenue From Contracts With Customers, to adjust its education process for future guidance, boost outreach with financial software providers, and find ways that could reduce implementation costs of significant standards. Golden said the review would focus on companies that have already implemented revenue. In particular, the FASB wants to know what were the. Read More.
FASB Standard Addresses New SEC Guidance
A new Accounting Standards Update (“ASU”) features amendments to select Securities and Exchange Commission (“SEC”) paragraphs under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”). Issued as ASU No. 2017-14, Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606), the standard amends the Accounting Standards Codification to incorporate the following SEC guidance: SEC Staff Accounting Bulletin (“SAB”) No. 116: SAB No. 116 aligns current SEC staff guidance with ASC Topic 606, Revenue from Contracts with Customers. This bulletin updated SAB Topic 13, Revenue Recognition, SAB Topic 8, Retail Companies,. Read More.
Topics: Accounting Standards Codification, Accounting Standards Update "ASU", FASB, Financial Accounting Standards Board "FASB", Income Statement, Revenue from Contracts with Customers (Topic 606), Revenue Recognition, SEC, SEC Staff Accounting Bulletin, Securities and Exchange Commission "SEC", Vaccines for Federal Government Stockpiles
Interpretive Guidance Updated for Revenue Recognition
New interpretive guidance is available regarding revenue recognition. On August 18, the Securities and Exchange Commission (“SEC”) issued Release No. 33-10402, Commission Guidance Regarding Revenue Recognition for Bill-and-Hold Arrangements, which advises public companies to abandon the guidance for bill-and-hold transactions under Accounting and Auditing Enforcement Release (“AAER”) No. 108, In the Matter of Stewart Parness, once they start applying Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers. Until then, companies should continue using guidance under AAER No. 108. Another interpretive release issued was Release No. 33-10403, Updates to Commission Guidance Regarding Accounting for. Read More.
Topics: Accounting and Auditing Enforcement Release, Accounting Standards Codification, FASB, Financial Accounting Standards Board "FASB", Revenue Recognition, SEC, Securities and Exchange Commission "SEC", Staff Accounting Bulletin "SAB"
FASB Makes Decisions on Conceptual Framework and Codification Projects
At its August 30 board meeting, the Financial Accounting Standards Board (“FASB”) reached decisions on two ongoing projects. The first project covered was the conceptual framework project, in which the FASB agreed to remove the terms “probable”, “future economic benefits”, “sacrifices of economic benefits”, and “past transactions or events” from its revised definitions of an asset and a liability. Staff members were ordered to continue reviewing whether “control” is needed in the FASB’s definition of an asset. The FASB then discussed its project to improve the Accounting Standards Codification (“Codification”). Talks involved a staff analysis of the proposed changes and. Read More.