Revenue Recognition

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Understanding Revenue Recognition Guidance

In 2014, the FASB issued their much anticipated and finalized standard, Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASC 606).

ASC 606 replaces all existing revenue recognition guidance and applies to all entities who enter into contracts with customers unless those contracts are within the scope of other standards. The reporting impacts for entities vary by industry, as well as the number and types (custom or standard) of contracts.

Even if the reporting for an entity is not considered significant, companies must still go through the process to review their contracts, assess any changes, and quantify their assessment.

Our team helps businesses assess the areas in which financial reporting and disclosures will be impacted by:

  • Reviewing a sample of contracts and other agreements to obtain an understanding of how each revenue stream and upfront costs (as applicable) are recognized under contracts.
  • Comparing current accounting policies under the contracts against the revenue recognition and cost requirements under ASC 606, Contracts with Customers.
  • Preparing a memorandum of key terms and conditions under the contracts and the recommended accounting treatment with reference to the applicable standards.
  • Being available to assist and consult with management in determining an appropriate approach, if any changes are required to accounting policies and procedures.
  • Consulting as necessary, to reach an agreement in management’s proposed positions with outside auditors.

Engineering Construction Revenue Recognition - Virginia CPA Firm

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