Changes coming to revenue recognition for construction contractors
CONSTRUCTION QUARTERLY UPDATES |
In May, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) issued substantially converged final standards on revenue recognition. The FASB's Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), provides a robust framework for addressing revenue recognition issues and will replace almost all the existing revenue recognition guidance in current U.S. generally accepted accounting principles (GAAP) upon its effective date, including most of the industry-specific guidance applicable to construction contractors. Applying the new guidance to construction contracts could significantly affect the timing and amount of revenue recognized by a contractor.
Even though delayed effective dates are provided in the ASU, it is not too early to gain an initial understanding of how a contractor's revenue recognition could be affected by the new guidance. To help you gain this understanding, read our summary, Changes coming to revenue recognition for construction contractors located at Revenue Recognition: Industry Insights.