New accounting standard may affect your revenue recognition

Description

Abstract: Recently, FASB and the IASB issued a new, converged revenue recognition standard, concluding a multiyear effort to develop uniform, worldwide guidelines. By replacing industry-specific rules, the new standard strives to eliminate inconsistencies and improve financial statement comparability. This article explains how the standard will, for some contracts, change the timing of revenue recognition. It will also require management to exercise greater judgment over revenue reporting and to include new financial statement disclosures about the process. A sidebar looks at when, under the new standard, a good or service is treated as a separate performance obligation.