Revenue recognition standard released – ASU 2014-09
FASB has released the long-awaited standard for revenue recognition.
The super short version – There is a five step process to recognize revenue. From the Journal of Accountancy’s article, FASB, IASB release historic revenue recognition standard:
Companies would recognize revenue through a five-step process:
Step 1: Identify the contract with a customer.
Step 2: Identify the separate performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the separate performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The translated, simplified effective date is 12/31/17 financial statements for public companies and 12/31/18 financials for nonpublic companies.
Some introductions here:
- FEI Daily – FASB, IASB Rev Up Transition Group as Rev Rec is Released
- FEI Daily – Simplification Can Be Complex: Rev Rec’s 5 Step Process
The ASU is available at the FASB’s website in three parts: