What is Next on the Horizon – Revenue Recognition
In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. This Guidance was updated in July 2015 and is effective for public Companies with calendar year ends in the first quarter of 2018.
Although the effective date is less than a year out, how an entity chooses to adopt the revenue recognition standard which contracts will need to be restated. If a public entity chooses full retrospective adoption, revenue recognition for all contracts must be restated for 2016 and 2017 to show comparative financial statements with a cumulative adjustment as of January 1, 2016. Chord has experienced professionals including a former FASB project manager that worked on the new revenue standard and former Big 4 National Office alumni that have extensive experience with complex revenue recognition issues. We have developed a workplan so that Companies can evaluate changes from current GAAP to the new revenue recognition standard and the resulting impact on their t contracts, revenue streams, and financial statements. Specifically, Chord can:
- Develop an implementation strategy – group similar contracts, establish a timeline, identify resources, establish budgets, select transition methods, etc.;
- Provide an initial assessment – Chord uses an internally developed template to identify the impact to groups of similar contracts; prepare GAP analysis with the Company’s current revenue recognition policies;
- Monitor evolving interpretations of the new revenue standard and prepare whitepapers, journal entries, and disclosures.