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.
Public and private companies alike are at varying stages in adoption of the new revenue recognition standard, Revenue from Contracts with Customers. Many finance and accounting departments have experienced challenges in understanding and implementing the new rules as it applies to their business because the new ASC 606 guidance has proven to be more complex than initially anticipated.
It’s time to start preparing for the new revenue recognition guidelines. Whether you like it or not, ASC 606 / IFRS 15 changes are here and could have a significant impact on your company's reporting, systems, processes, and controls. Companies should start planning now in order to ensure a successful transition to the new ASC 606 / IFRS 15 guidelines.
Organization must keep pace with new recurring revenue models while complying with tremendous change brought on by the new revenue recognition standard embodied in IFRS15 / ASC606. Companies who want to be successful in overcoming revenue recognition challenges should be proactive and start implementing a plan for ASC 606 immediately. Public companies must adopt the new standard for periods starting after Dec, 2017. Private companies must adopt for periods starting after Dec, 2018. There is a lot of work to be done.
To ensure consistent application of rev rec rules, companies need to be armed with a strong internal understanding of how ASC606 applies to their particular business model. Where internal know-how comes up short, third-party consultants can provide the additional expertise – and peace of mind – when assessing the impact of revenue recognition.
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.
Application of ASC 606 is a major issue for businesses impacted by the new revenue recognition rules. Most companies seem to be generally familiar with the new revenue recognition standard; however, there are specific areas within the rules are vague. Many are left with wondering how the new revenue recognition rules will impact their business. This causes major challenges and risks for any business that doesn't take the time to fully understand how ASC 606 and IFRS 15 affects their operations.
As 2015 comes to a close, were reflecting on all of the exciting revenue recognition standard and awesome tips that we published on the Softrax Blog this year. Did you catch these most popular blog posts on our Softrax Blog? We've compiled them below.
The new revenue recognition rules are daunting and many companies wonder how they will be impacted by ASC 606. What really happens to companies if they don't comply with the new revenue recognition rules? Who enforces these rules? The reinvigorated regulatory agecny, the SEC takes action on improper revenue recognition accounting. Learn about the SEC's role with revenue recognition and how to avoid improper revenue accounting.