Revenue Recognition Impact on Engineering and Construction Businesses
The Financial Accounting Standards Board (FASB) issued its new standard on revenue from contracts with customers (ASU 2014-09) in May of 2014. The standard will replace all existing revenue recognition guidance and will apply to all entities who enter into contracts with customers, unless those contracts are within the scope of other standards (i.e. insurance and lease contracts). Private companies are required to adopt FASB ASC 606 – Revenue from Contracts with Customers effective for years beginning after December 15, 2018.
Is Your Business Prepared to Implement ASC 606?
Engineering and construction companies are required to analyze their contracts and the revenue recognition standard’s impact on an individual basis. The first step to this process is understanding the new rules and developing a framework to assess the company’s current contracts. Even if the reporting for an entity is not considered significant, engineering and construction companies must still go through the process to review their contracts, assess any changes, and quantify their assessment.
Our Engineering and Construction Revenue Recognition Guide will give you insights into what contractors need to know, three main accounting impacts to consider as a result of the new revenue recognition standard, and other accounting items including contract assets and liabilities, revenue from claims, and required disclosures.
We can help you take a deeper dive into the key areas necessary to understanding and preparing for implementing the many aspects of revenue recognition criteria to your engineering or construction business.
Additional Revenue Recognition Resources:
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.