FASB Says to Use Judgment When Applying Revenue Standard
Companies will have to make a judgment call when recording revenue from customer contracts over time when the Financial Accounting Standards Board’s (“FASB”) revenue standard becomes effective in 2018. That was the message members of the FASB’s Transition Resource Group (“TRG”) stressed during last week’s discussion on Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers. FASB assistant project manager Aaricka Friend commented that the standard makes it very clear that revenue is to be recorded from the moment when a business meets its obligations to a customer. TRG members also said that the timing could change, so companies must be mindful when determining how the top line in its income statement should be recorded.
Public companies must implement the revenue recognition standard in 2018.