How Nonprofits Can Address Revenue Recognition Issues
Some companies are beginning to implement the Financial Accounting Standards Board’s (“FASB”) revenue recognition standard and the board’s standard on nonprofit financial reporting. For nonprofits, however, one of the main challenges they face is whether certain revenue transactions are considered contributions or exchange transactions. In addition, when reviewing transactions, what is considered a conditional contribution or an unconditional contribution? For more nonprofits and revenue recognition, visit The Journal of Accountancy. As always, Cherry Bekaert’s Nonprofits group can assist with the implementation of the FASB’s revenue recognition standard and your financial reporting needs.
The New Revenue Recognition World
By: Michael Brown, Senior Manager The effective date for the new revenue recognition standard is fast approaching and will be here before we know it. By now, you have probably heard speculation about the impact of the standard to your company. Speculation has been from no impact at all to the world is going to be entirely different post implementation. As always, the reality is somewhere in the middle. Generally speaking, for the government contracting industry, the end result of when and how much revenue is recognized will be similar as in the past or at least should not significantly. Read More.
Nonprofits Concerned with Contribution Classifications for Revenue Standard
Several nonprofits are confused over whether to classify a contribution as having a restriction or a condition with respect to the Financial Accounting Standards Board’s (“FASB”) revenue recognition standard. The issue is significant to nonprofits because it impacts the timing of recording the revenue from the contribution, but FASB Assistant Director Jeffrey Mechanick recently cautioned that it will ultimately be in the hands of an organization’s financial report preparers to decide. At last week’s meeting between the FASB and its Not-for-Profit Advisory Committee, Mechanick said due to the amount of judgment in practice, the board is attempting to offer improved. Read More.
SEC’s Bricker Urges Implementation of Revenue Recognition Standard
Nearly 10 percent of public companies have not started to implement Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). While the percentage is insignificant, Securities and Exchange Commission (“SEC”) Chief Accountant Wesley Bricker is telling unprepared companies they have no option but to begin the implementation process. At a panel discussion during the SEC Speaks conference on February 25, Bricker said that companies cannot overlook the importance of the Financial Accounting Standards Board’s revenue recognition standard and must prepare accordingly. He encouraged companies to communicate their implementation plans with audit committees, executive teams and others, and. Read More.
Topics: FASB, Financial Accounting Standards Board "FASB", Revenue from Contracts with Customers (Topic 606), Revenue Recognition, SEC, Securities and Exchange Commission "SEC", Staff Accounting Bulletin "SAB"
Revenue Recognition Draft Guidance Issued for Utilities and Time-Share Companies
By Brynn McNeil The American Institute of Certified Public Accountants’ Financial Reporting Executive Committee has issued the following working drafts to address implementation of Accounting Standards Update No. 2016-09, Revenue From Contracts With Customers, by the Financial Accounting Standards Board (“FASB”): Working Draft: Proposed Implementation Issues for Revenue Recognition: Power & Utility Entities (#13-1): Accounting for Tariff Sales to Regulated Customers. Intended to help power and utility companies with applying ASU No. 2016-09 to revenues caused by regulated utility tariffs, this working draft explains that agreements between utilities and customers for services provided under a regulated tariff must be disclosed as a. Read More.
Topics: Accounting Standards Update "ASU", AICPA, American Institute of Certified Public Accountants "AICPA", FASB, Financial Accounting Standards Board "FASB", Financial Reporting Executive Committee "FinREC", Proposed Implementation Issues, Revenue Recognition, Working Drafts
FASB Clarifies Donor-Imposed Conditions
During a discussion last Wednesday concerning its project on revenue recognition of grants and contracts by nonprofits, the Financial Accounting Standards Board (“FASB”) agreed to refine guidance under Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition. Specifically, the FASB clarified the definition of a “donor-imposed condition” by including the following: A right of return, involving either a return of assets transferred or a release of a promisor from its responsibility to transfer assets. A barrier that must be overcome before the recipient receives transferred or promised assets. Indicators and illustrative examples would help describe a barrier.