When the changes to revenue recognition under ASC Topic 606 were introduced in 2014, it marked one of the most significant accounting changes in history. The goal of the standard update was to improve guidance on how revenue should be recognized when companies enter into contracts with customers.
Topics: FASB, Revenue recognition, revenue
In late October, the Financial Accounting Standards Board (FASB) released a narrow scope change to the accounting for business combinations. This Accounting Standards Update (ASU) 2021-08 is expected to reduce diversity in practice for the recognition of contract assets and liabilities, such as deferred revenue, in a business combination, and will in some circumstances reduce cost and complexity of existing US GAAP.
Topics: accounting, FASB, Revenue recognition, Business Combinations
When organizations are financially struggling or affected by external events, several accounting considerations come into play. External events arising from the COVID-19 pandemic and its disruption could intersect with several components of accounting. A brief summary of possible considerations are described below.
Topics: goodwill impairment, going concern, income tax accounting, Revenue recognition, COVID19, Coronavirus, financial statement disclosures, SEC, PPP Loan, Payment Protection Program, credit loss
The economic impact from the novel coronavirus has been a significant challenge for most companies, whether due to changes in customer demand, shuttering of operations or constraints on labor and supply chain. Considering these ramifications, companies may be more inclined in the COVID-19 pandemic environment to implement pricing changes in order to improve customer retention. Such steps may include incremental discounting in the form of marketing offers, broad ranging price concessions, or specific customer contract modifications. The revenue recognition implications from these actions can be complex; we will delve into each to highlight the nuances and accounting considerations of each.
Topics: Revenue Recognition Standard, Revenue recognition, COVID19, Coronavirus, Coronavirus Aid, Relief, and Economic Security Act
During the Financial Accounting Standards Board (FASB) board meeting on May 20, the Board voted to defer the adoption of ASC Topic 606, Revenue from Contracts with Customers, (Topic 606) for all entities that have not yet adopted the standard, by one year from the previous adoption date. It also approved a one-year deferral of the leasing standard for non-public business entities and not-for-profits. The deferrals are designed to provide flexibility to entities that may be struggling with preparing and issuing financial statements due to the unique circumstances presented by the COVID-19 pandemic.
Topics: FASB, Revenue recognition, leasing standard, COVID19, Coronavirus, CARES Act, Coronavirus Aid, Relief, and Economic Security Act
The potential accounting impacts from the coronavirus have been extensive and from a financial reporting perspective, broad-ranging, affecting among others, a company’s going concern considerations, asset impairment considerations and financial statement disclosures. Yet another critical accounting area that could be affected by COVID-19 is revenue recognition, including revenue recognition internal control processes.
Topics: Revenue recognition, ASC Topic 606, COVID19, Coronavirus, CARES Act, Coronavirus Aid, Relief, and Economic Security Act
The Coronavirus disease (COVID-19) pandemic has effected countless aspects of our daily lives and business, and accounting is no exception. Many companies will need assistance navigating the complexities of accounting guidance—particularly during these times of uncertainty and business and workflow disruptions. The COVID-19 pandemic will likely impact a variety of your accounting estimates and the application of current accounting guidance. It may also require your organization to perform a number of analyses and tests during an interim period that may otherwise have not been necessary. You will be required to create detailed memoranda and documentation to illustrate that the proper analysis supports the conclusions reached for your auditors and Q1 filing. We are here to help Securities and Exchange Commission (SEC) filers navigate and interpret the applicable accounting guidance during these ever-changing times, as well as aid with the preparation of technical memoranda and other documentation that you are required to prepare.
Topics: goodwill, public company, Revenue recognition, intangible assets, ASC Topic 606, Coronavirus, COVID-19, sec filer, ROU assets, ASC 350, SEC extension
By nature of their business, service organizations may face challenges with their determination of when revenue from contracts should be recognized under ASC Topic 606, Revenue from Contracts with Customers. In addition to the obvious accounting issues associated with timing of revenue recognition, this determination will also impact their financial statement disclosure requirements as it relates to revenue recognition.
Topics: accounting, Revenue recognition, hedging
What a long, strange trip it’s been from the release of the new revenue recognition standard to the adoption year for private companies. The Financial Accounting Standards Board (FASB) released its initial changes to accounting for revenue from contracts five years ago under ASC Topic 606, Revenue from Contracts with Customers. In the intervening years, changes have been made, effective dates delayed, and public companies adopted the standard.
Topics: Revenue Recognition Standard, Revenue recognition, ASC Topic 606
As the effective date of the new revenue standard draws nearer and implementation becomes imminent for non-public entities within its scope, management should be aware of some important areas that their auditors will be focusing on in the upcoming months.
Topics: private companies, private company, FASB, Revenue recognition, Financial Accounting Standards Board, ASC Topic 606, Revenue from Contracts with Customers
