Have you hit the snooze button one too many times on your revenue recognition alarm? It’s every student’s (or accountant’s) nightmare: before you know it, the term has ended, and one of the most important tests of the year (ASC 606 and IFRS 15: Revenue from Contracts with Customers), is here. Your teacher will soon hand you the revenue recognition standard exam – but are you ready?
There is an abundance of literature on the upcoming revenue standard, ASC 606 and IFRS 15: Revenue from Contracts with Customers, that deals with the ‘who’, ‘what’, ‘when’, ‘where’, ‘why’, and, maybe not so much, the ‘how’, of compliance. Therefore, this blog will ultimately focus on the ‘how’ of complying with the new revenue recognition standard.
Below, we compiled some tips and tricks that will allow you to pass your revenue recognition exam, regardless of which phase your company currently is in.
The new revenue recognition standard is being converted into a single model across all industries. The new global framework for revenue accounting has numerous challenges for companies including: Application and Controls. Application was described in the previous blog post.
Companies will be required to adopt a new universal framework for revenue recognition – one that will hold regardless of vertical, product or service. Currently we have two different standards US GAAP and IFRS 15. The US Financial Accounting Standards Board (FASB) and its international counterpart, the IASB, have spent a significant amount of time reassessing their respective principles and decided to standardize revenue recognition into one common standard – ASC606.