Revenue recognition: Industry insights

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a robust framework for addressing revenue recognition issues and will replace almost all existing revenue recognition guidance in current U.S. generally accepted accounting principles (GAAP) upon its effective date. Included in the revenue recognition guidance that will be superseded is the vast majority of industry-specific revenue recognition guidance currently in U.S. GAAP, including the guidance applicable to construction contracts, software arrangements, health care entities and real estate transactions, to name just a few.

Implementation of the new revenue recognition guidance must occur no later than the quarter and year beginning January 1, 2018, for public entities with a calendar year end (with a limited exception for certain public business entities). For all other entities with a calendar year end, implementation must occur no later than the year ending December 31, 2019. Given the fast-approaching effective date, entities should be well on their way to assessing how the new guidance will affect their revenue recognition policies and disclosures, developing an implementation plan and completing that implementation plan. This is particularly true for public entities, entities that plan on electing the full retrospective transition method and entities that have multi-year contract terms with their customers.

To assist in this process, refer to our publication, A guide to revenue recognition, and the industry-specific webcasts and white papers referred to in the table that follows.

For more insights, visit our Revenue Recognition Resource Center.