FASB Announces Delay in Revenue Recognition Standard
FASB proposed delaying the effective date of the new revenue recognition standard by one year On April 1, 2015. The new standard will now be effective for annual periods beginnings after December 15, 2017 for public companies and December 15, 2018 for non-public companies. Early adoption would be allowed for annual periods beginning after December 31, 2016. As noted in previous Anders blog posts, the goal of the new revenue recognition standard is to replace the transaction and industry specific revenue recognition guidance under current GAAP with a principle based method for determining revenue recognition.
The proposal to push back the effective date of the standard stems from the result of concerns from financial statement preparers who needed more time and clarity to properly implement the new standard. Concerns ranged from identifying performance obligations to determining the transaction price for contracts with variable consideration.
The AICPA has formed sixteen industry task forces (click here to see list of industries) that will provide illustrative examples for the application of the new revenue recognition standard. Anders is closely monitoring literature from these task forces and will be proactive in bringing these examples to our clients.
The standard requires comparative data in the financial statements in the year of implementation, so planning in the year before the effective date is essential to be in a position to comply with the standard in the first year of implementation. Your Anders advisors can assist you in understanding the new revenue recognition standard’s impact on your business and help develop a plan to implement a new revenue recognition policy in accordance with this new standard.