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SEC Staff Observer Comments Rescinded

The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. The Update rescinds Securities and Exchange Commission (“SEC”) paragraphs in accordance with the following SEC Staff Observer comments, which are related to Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, upon the effective date of Topic 606, Revenue from Contracts with Customers: Revenue and Expense Recognition for Freight Services in Process in paragraph. Read More.

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Revenue Recognition Narrow-Scope Amendments and Practical Expedients Issued

The Financial Accounting Standards Board has issued Accounting Standards Update (“ASU”) No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU No. 2016-12 clarifies guidance in certain areas and adds practical expedients. The updated guidance and practical expedients in the amendments include the following: Assessing the Collectibility Criterion in Paragraph 606-10-25-1(e) and Accounting for Contracts That Do Not Meet the Criteria for Step 1 (Applying Paragraph 606-10-25-7). ASU No. 2016-12 clarifies the collectibility criterion in Step 1, and adds a new criterion to paragraph 606-10-25-7 which clarifies when revenue is recognized for a contract that. Read More.

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Results from April 18th Revenue Recognition TRG Meeting

Earlier this week, the Revenue Recognition Transition Resource Group (“TRG”) held a meeting to discuss the issues regarding the implementation of Topic 606, Revenue from Contracts with Customers, and International Financial Reporting Standards 15, Revenue from Contracts with Customers. Staff members and the TRG agreed on the following matters: Memo No. 50, Scoping Considerations for Incentive-based Capital Allocations. Incentive-based capital allocations are within the scope of Topic 606. Memo No. 51, Contract Asset Treatment in Contract Modifications. A contract asset is sustained in the new modified contract and recognized under the new modified contract similar to receivables, resulting in prospective accounting.. Read More.

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Financial Reporting Manual Updated

On March 17th, the Securities and Exchange Commission’s Division of Corporation Finance issued an updated Financial Reporting Manual that addresses transition issues in regard to Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). The updates include implementation guidance for companies that adopt the Financial Accounting Standards Board’s revenue recognition standard using the full retrospective method or modified retrospective approach. Companies that adopt the full retrospective method, for instance, will not have to recalculate their investments in other entities, as stated by Rule 3-09 of Regulation S-X. The revised Financial Reporting Manual also reflects changes from the. Read More.

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FASB Discusses Topic 606 Pre-Agenda Research

At its meeting earlier this month, the Financial Accounting Standards Board (“FASB”) reviewed pre-agenda research for updates to Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). In particular, the discussion focused on certain disclosure requirements for remaining performance obligations. The FASB agreed to add a practical expedient to the requirement for disclosing remaining performance obligations for certain types of variable consideration. Also agreed upon were improvements to the qualitative disclosure requirement for remaining performance obligations in paragraph 606-10-50-15. The following types of variable consideration would not be required in an entity’s disclosure of its remaining. Read More.

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FASB Updates Guidance for Principal versus Agent Revenue Accounting

Improving the implementation guidance regarding principal versus agent revenue considerations, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (ASU) No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments in ASU No. 2016-08 clarify the following: A company must determine the nature of each specified good or service promised to a customer (e.g., a good/service itself or right to a good/service). Then a company decides whether it is acting in the capacity as a principal or agent for each individual good or service promised to a customer.. Read More.

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