On the Horizon
The development of the new revenue recognition standards date back to over a decade ago but at last it is time for implementation. Are you prepared?
For Public entities, the amendments of ASC 606 are effective for annual reporting periods beginning after December 15, 2016. For all other entities, the amendments of ASC 606 are effective for annual reporting periods beginning after December 15, 2017. In plain English, this means effective January 1, 2018 for all nonpublic calendar year entities!
To whom do the new standards apply ?
The new revenue recognition standards will apply to entities in almost all industries that have contracts with customers for goods or services. The new standard will require companies to follow a five step process in recognizing revenue for every transaction:
- Identify the contract
- Identify the performance obligations
- Determine the transaction price
- Allocate the transaction price to each performance obligation and
- Recognize revenue as each performance obligation is satisfied
What you Should be Doing Now
Early preparation will be key to a smooth transition into the application year as it applies to financial reporting, timely income tax return filing, business processes and systems and change management and communication. The following are items that should be considered and/ or implemented now:
- Updates to accounting, tax and compliance processes
- Understand revenue streams and how the new standard will impact recognition of revenue
- Understand new estimates that judgements management will be responsible for
- Update systems and processes for tracking
- Amendments to internal controls
- Drafting new financial statements disclosures
- Communication to stakeholders, key management, and audit committees
How We Can Help
Newburg & Company, LLP has an accounting services team available to help implement the new revenue recognition standards. Newburg & Company, LLP has been helping companies implement new accounting standards for over 30 years and has the knowledge and experience to help your Company with the challenges that arise with the implementation of the new revenue standard. For help accessing the impact of ASC 606 on your Company please contact us at firstname.lastname@example.org.