New accounting rule for revenue recognition – Real estate companies must exercise more judgment
Abstract: FASB has recently issued new guidance that standardizes when and how every type of company must recognize revenue. The guidance makes significant changes to the rules for accounting for real estate sales and makes it likely that revenue will be recognized sooner than it has been under the existing guidance. This article describes five steps that, going forward, a business must follow to determine when to properly recognize revenue on its financial statements. However, as a sidebar explains, the current accounting rules for most sale-leaseback transactions involving real property were retained.