United States

Revenue recognition resources updated for recent developments


In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), which added new guidance to the following topics and subtopics in the Accounting Standards Codification (ASC):

  • ASC 606, “Revenue from Contracts with Customers”
  • ASC 340-40, “Other Assets and Deferred Costs – Contracts with Customers”
  • ASC 610-20, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets”

The FASB has made numerous changes to the new guidance since its issuance. Recently, the FASB issued ASU 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services, which clarified that the grantor is considered the customer of the operations services provided by the operating entity in a service concession arrangement within the scope of ASC 853 (refer to our article, Customer of operation services in a service concession arrangement, for additional information). Also, the FASB recently issued a proposed ASU, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, which would (if finalized) clarify when a transfer of assets from a resource provider (e.g., a government) to a not-for-profit entity should be accounted for as: (a) a contribution received in accordance with the relevant guidance in ASC 958-605, “Not-for-Profit Entities – Revenue Recognition,” or (b) an exchange transaction in accordance with ASC 606 (refer to our article, Proposed clarifying guidance for contributions received and made, for additional information).

In addition, the SEC Observer at the FASB Emerging Issues Task Force meeting on July 20, 2017, announced that the SEC staff would not object to entities that are public business entities solely because their financial statements or financial information is included in a filing with the SEC pursuant to SEC rules and regulations (e.g., an acquired private company when its financial statements are included in the acquirer’s filing with the SEC pursuant to Regulation S-X Rule 3-05, Financial Statements of Businesses Acquired or to Be Acquired) adopting the new guidance in accordance with the effective date applicable to private companies (refer to our article, Some PBEs may use private company effective dates for ASC 606 and 842, for additional information).

We have updated the following revenue recognition resources for these recent developments (as appropriate):

Given the fast-approaching effective dates of the new guidance, entities should be well on their way to understanding and implementing the new guidance, especially those that are public entities, as well as those that plan on electing the full retrospective transition method and have multi-year contract terms with their customers.