With the 2018 effective date for the new revenue recognition standard issued by FASB quickly approaching, SC&H Group has pulled together a comprehensive series of industry specific resources. Consideration of developments and recognizing the possible affects it may have specific to your business is a necessary requirement industrywide. Like many huge changes, the standard will bring both opportunities and challenges.
At its core – The new revenue recognition standard provides a five-step approach for recognizing and measuring revenue. The new 5 step model states management should complete the following:
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
Many industries are finding the implementation requires more time than expected even when the accounting effects are not significant, therefore it is best to coordinate with your audit team to make sure this process is completed efficiently. As we have started working with clients we have noticed some trends and best practices among specific industries. The following posts share industry specific insights around revenue recognition standards with the 2018 effective date in sight.