AccountingLink

    Revenue recognition

    23 May 2019

    To the Point - The EITF will address revenue recognition related to contract modifications for licenses of IP
    The EITF will address two issues related to contract modifications for licenses of IP: (1) accounting for modifications that extend a license term but are not solely a renewal of the terms and conditions of the original license and (2) accounting for the revocation of a license, including conversion of a term software license to a software-as-a-service arrangement. All entities that license IP could be affected by potential standard setting as a result of this project.

    30 April 2019

    Comment Letter - FASB’s invitation to comment on measurement and other topics related to revenue contracts with customers acquired in a business combination
    In our comment letter, we recommended that the FASB consider amending ASC 805 to provide an exception to the general fair value measurement principle. Under our recommendation, an acquirer would carry over the accounting applied by the acquiree pursuant to ASC 606. We believe this approach would provide better overall alignment with the revenue accounting model in periods after a business combination, improve a financial statement users’ understanding of revenue contracts acquired in a business combination and be practical for preparers to apply.

    13 March 2019

    To the Point - FASB proposes requiring equity awards granted to customers to be measured at the grant date
    The FASB proposed requiring that share-based payments granted to a customer in connection with the sale of goods or services be measured and classified in accordance with ASC 718. The amount recorded as a reduction of the transaction price would be measured using the grant-date fair value of the share-based payment. Comments are due by 18 April 2019.

    21 February 2019

    Private Company Reporting Update - Focus areas for implementing the new revenue recognition standard
    Our publication highlights certain aspects of the standard that entities that have already adopted the standard have found particularly challenging to implement and provides examples of how to apply the guidance. It also highlights the disclosure requirements for private companies. This publication supplements our Financial reporting developments (FRD) publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    20 December 2018

    Technical Line - Year-end accounting and disclosure reminders for reporting under ASC 606
    As they prepare for year-end reporting, companies that have adopted the new revenue standard should carefully evaluate their accounting and disclosures in areas that required significant judgment or changes in practice from legacy GAAP. Entities should continue to improve and refine their disclosures based on their increasing experience with the new standard and disclosures provided by their peers. Our Technical Line provides key reminders and considerations about the revenue standard entities may need to consider in preparing their annual (or interim) financial statements and reports.

    19 December 2018

    Technical Line - How the new revenue standard affects the insurance industry
    This Technical Line highlights key aspects of applying ASC 606 to arrangements entered into by entities in the insurance industry and reflects the latest implementation insights, including issues addressed by the insurance task force formed by the American Institute of Certified Public Accountants. This publication supplements our Financial reporting developments publication, Lease accounting: Accounting Standards Codification 842, Leases, and should be read in conjunction with it.

    6 November 2018

    To the Point - FASB clarifies the guidance on collaborative arrangements
    The FASB amended ASC 808, Collaborative Arrangements, and ASC 606, Revenue from Contracts with Customers, to clarify that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. The guidance also precludes an entity from presenting consideration received from a transaction as revenue from contracts with customers if the counterparty is not a customer for that transaction.

    11 October 2018

    Financial Reporting Developments - Revenue from contracts with customers (ASC 606)
    Our FRD publication on ASC 606, Revenue from Contracts with Customers, has been updated to further clarify and enhance our interpretative guidance. Refer to Appendix A of the publication for a summary of the significant updates.

    26 September 2018

    Accounting overview of ASC 606 for private companies – on-demand video
    An on-demand video is now available to help private companies get started with implementing the new revenue recognition standard. This video addresses the five-step model under ASC 606, the accounting for licenses of intellectual property and the criteria for cost capitalization under the new guidance in ASC 340-40. The video also addresses the disclosure requirements in ASC 606 for private companies.

    6 September 2018

    Technical Line - FASB issues guidance on accounting for implementation costs in cloud computing arrangements
    Our Technical Line highlights key accounting and financial reporting implications of the new standard that requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Early adoption is permitted for all entities.

    11 June 2018

    Comment Letter - FASB proposal to clarify the guidance on collaborative arrangements
    In our comment letter, we support the FASB’s proposal to clarify the scoping guidance in ASC 808, Collaborative Arrangements, and ASC 606, Revenue from Contracts with Customers, and believe the amendments would remove doubt about whether a counterparty in a collaborative arrangement also could be a customer for one or more transactions. However, we do not believe the FASB should preclude the presentation of amounts recorded for collaborative arrangements as revenue when the amounts are not received from a customer or directly related to third-party sales.

    31 May 2018

    Financial Reporting Developments - Software: Revenue recognition
    We have updated our FRD publication on software revenue recognition to clarify and enhance our interpretative guidance.

    21 March 2018

    Financial Reporting Developments - Revenue recognition: Multiple element arrangements
    We have updated our Financial reporting developments publication on multiple element arrangements. Refer to Appendix C of the publication for a summary of the updates.

    1 March 2018

    To the Point - FASB proposes guidance on accounting for implementation costs in cloud computing arrangements
    The FASB proposed requiring a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset. The proposal would align the guidance for recognizing implementation costs incurred in a hosting arrangement that is a service contract with that for implementation costs incurred in an arrangement that includes an internal-use software license. The FASB also proposed new disclosures for implementation costs for all internal-use software and hosting arrangements.

    4 December 2017

    Technical Line - How the new revenue standard affects life sciences entities
    We have updated our Technical Line, How the new revenue standard affects life sciences entities, to include additional factors that life sciences entities should consider when evaluating the effect of termination clauses on contract duration and to reflect the SEC release that updates the Commission’s guidance on accounting for sales of vaccines that are placed in the national stockpile. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    20 November 2017

    Technical Line - How the new revenue standard affects midstream oil and gas entities
    Our Technical Line highlights key implications of the new revenue standard for midstream oil and gas entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606) , and should be read in conjunction with it.

    10 October 2017

    To the Point - How companies should prepare for the audit of the new revenue standard
    The PCAOB issued a staff alert discussing what auditors need to do to audit a company’s implementation of the new revenue recognition standard. While the alert is aimed at auditors, it provides a roadmap for management about how to prepare for the audit of the company’s implementation of the new standard.

    25 August 2017

    Technical Line - How the new revenue standard affects engineering and construction entities
    Our Technical Line highlights key implications of the new revenue standard for engineering and construction entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    24 August 2017

    Technical Line - Common challenges in implementing the new revenue standard
    Our Technical Line highlights aspects of the revenue recognition standard that some entities are finding particularly challenging to implement and provides examples of how to apply the guidance in these areas. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    11 August 2017

    To the Point - Update on accounting for pre-production and tooling activities and costs under ASC 606
    Manufacturing and production companies in various industries have raised questions about how they should account for activities and costs incurred prior to the production of goods under a supply arrangement after they adopt the new revenue recognition standard. As public companies finalize their ASC 606 accounting policies and prepare to adopt the new standard, a consensus has emerged that a number of views related to the accounting for pre-production and tooling activities could be appropriate.

    27 July 2017

    Technical Line - How the new revenue recognition standard affects automotive OEMs
    Our Technical Line highlights key implications of the new revenue standard for automotive OEMs. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    20 July 2017

    Technical Line - How the new revenue standard affects technology entities
    Our Technical Line highlights key implications of the new revenue standard for technology entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    13 July 2017

    Technical Line - How the new revenue standard may affect a company’s income tax accounting
    As companies prepare to adopt the new revenue recognition standard, they must consider the potential income tax accounting implications. Adoption of the standard may create new temporary differences or require the remeasurement of existing ones, and companies may need to revise their processes and data collection tools to capture any new ones. Tax professionals should be actively involved in implementation discussions to make sure all implications are considered.

    30 June 2017

    Technical Line - How the new revenue standard affects airlines
    Our Technical Line highlights key implications of the new revenue standard for airlines. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    29 June 2017

    Technical Line - How the new revenue recognition standard affects upstream oil and gas entities
    Our Technical Line highlights key implications of the new revenue standard for upstream oil and gas entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    29 June 2017

    Technical Line - How the new revenue standard affects asset managers
    Our Technical Line highlights key implications of the new revenue standard for asset managers. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    29 June 2017

    Technical Line - How the new revenue standard affects banks
    Our Technical Line highlights key implications of the new revenue standard for banks. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    29 June 2017

    Technical Line - How the new revenue standard affects brokers and dealers in securities
    Our Technical Line highlights key implications of the new revenue standard for brokers and dealers in securities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    29 June 2017

    Technical Line - How the new revenue standard affects downstream oil and gas entities
    Our Technical Line highlights key implications of the new revenue standard for downstream oil and gas entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    29 June 2017

    Technical Line - How the new revenue standard affects operating real estate entities
    Our Technical Line highlights key implications of the new revenue standard for operating real estate entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    22 June 2017

    Technical Line - How the new revenue standard affects telecommunications entities
    Our Technical Line highlights key implications of the new revenue standard for telecom entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    1 June 2017

    Technical Line - How the new revenue standard affects health care entities
    Our Technical Line highlights key implications of the new revenue standard for health care entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    9 May 2017

    Technical Line - How the new revenue standard affects retail and consumer products entities
    Our Technical Line highlights key implications of the new revenue standard for retail and consumer products entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    23 February 2017

    Technical Line - How the new revenue standard will affect media and entertainment entities
    This Technical Line highlights how practice will change for media and entertainment entities under the new revenue standard issued by the FASB and the IASB. It addresses the amendments the FASB has made and the discussions of members of the Transition Resource Group for Revenue Recognition on topics of interest to media and entertainment entities. This publication supplements our Financial reporting developments publication, Revenue from contracts with customers (ASC 606), and should be read in conjunction with it.

    12 January 2012

    Technical Line - Aggregating milestone method disclosures may sometimes be appropriate
    Many life sciences companies adopted Accounting Standards Update 2010-17, Milestone Method of Revenue Recognition, for the first time in their 2011 financial statements. The standard requires disclosures at the individual milestone level. While we believe entities should provide these disclosures for each material milestone, it may be appropriate for life sciences entities to aggregate disclosures for immaterial milestones. Our Technical Line publication provides questions to consider when assessing the materiality of milestones for disclosure.