Time is Running Out to Prepare for Significant Revenue Recognition Changes

In 2014 the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board each released their new guidance on revenue recognition as part of an ongoing convergence project.  The resulting new standards are perhaps the most impactful changes ever released to arguably the most important single line item on any company’s financial statements.  While the new guidance has been out for several years and is not yet effective, companies are in varying degrees of preparedness for the overhaul: from possibly only aware that the new guidance exists to almost ready to implement.   Most public companies now have less than a year to analyze their exposure to the new rules, make needed procedural shifts, and communicate crucial information to external stakeholders, and private companies are soon to follow.


  • High-level background
  • The new core principle and five-step revenue recognition model
  • Step #1: Identify the contract(s) with a customer
  • Step #2: Identify the performance obligations in the contract
  • Step #3: Determine the transaction price
  • Step #4: Allocate the transaction price to the performance obligations in the contract
  • Step #5: Recognize revenue when (or as) the entity satisfies a performance obligation
  • What business leaders should consider now

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