On May 28, 2014, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) jointly issued Accounting Standards Codification (ASC) 606, Revenue from contracts with customers with the goal of improving the revenue recognition portion of financial statements and increase the consistency of financial reporting globally. ASC 606 applies to contracts with customers in all industries except for those excluded in ASC 606-10-15-2; Leases, Insurance contracts, contractual obligations within certain financial instrument guidance (Receivables, Investments, Liabilities, Debt, Derivatives and Hedging, Financial Instruments and transfers and servicing), Guarantees other than product or service warranties and nonmonetary exchanges between entities within the same line of business used to facilitate sales to customers.
ASC 606 Requirements
ASC 606 follows a five-step approach to recognizing revenue from contracts with customers and requires non public entities to adopt the standard for annual reporting periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. The five steps required by the standard are:
How Advaion can help
Changes in accounting standards can seem to be overwhelming if you aren’t surrounded with a team with the requisite experience. We believe you should reap the benefits of our experiences, however, we do not believe in imposing a generic methodology. Advaion can help with:
- Using our experience to determine how existing revenue policies interact with the new standard and outlining a
framework for evaluation
- Updating revenue policies
- Reviewing revenue processes, systems and contracts for impact of adoption
- Assisting with disclosure requirements
Contact us today for more information on collaborating with Advaion on your ASC 606 implementation.