FASB Revenue Recognition Standard’s Effective Date Pushed to 2018
Following its vote last month to offer companies an additional year to implement Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), the Financial Accounting Standards Board (“FASB”) has pushed the revenue recognition standard’s effective date to 2018. Announced via ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, the decision to delay the landmark standard’s effective date will not impact companies that elect to adopt the landmark standard as of its original 2017 date.
The FASB noted that public companies, certain nonprofits, and employee benefits plans will implement ASU No. 2014-09 for fiscal years, and quarterly and interim financial statements within such years, beginning after December 15, 2017. Public companies should adopt the standard for their 2018 first-quarter filings with the Securities and Exchange Commission. Furthermore, private companies and other entities will implement ASU No. 2014-09 for fiscal years beginning after December 15, 2018, as well as quarterly and interim financial statements for fiscal years beginning after December 15, 2019.
Published last year, ASU No. 2014-09 and the International Accounting Standards Board’s (“IASB”) own revenue recognition standard, International Financial Reporting Standards (IFRS) 15, Revenue from Contracts with Customers, provide companies principles-based approach for calculating the top line of their income statements. After the standards were issued, the FASB and IASB were flooded with requests asking to give companies more time to update their financial reporting systems and plan ahead of the changes. Similar to the FASB decision, the IASB also voted last month to defer the effective date of IFRS 15, but a formal update has yet to be published.