Revenue Recognition Newsletter - October 2014

October 2014

On May 28, 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) issued comprehensive revenue recognition standards (the “Standard”) entitled “Revenue from  Contracts with Customers” (ASU No. 2014-09 and IFRS 15), with a mandatory effective date in 2017 for public entities and 2018 for private entities. 
 
The new principles-based Standard replaces most previous United States GAAP and IFRS guidance, including industry-specific guidance. The Standard will affect the timing and measurement of revenue recognized for book purposes. Changes in the timing of revenue recognition under the Standard will have implications for taxable income, possibly resulting in required accounting method changes, new book/tax differences, and adjustments to deferred tax accounting.

Public entities will apply the Standard for annual periods beginning after December 15, 2016, including interim periods therein. Public entities are not permitted to adopt the Standard earlier than required. Nonpublic entities have an additional year to adopt, i.e., the new standard applies for annual periods beginning after December 15, 2017. In addition, the Standard is effective for nonpublic entities’ interim periods within annual periods that begin after December 15, 2018. Nonpublic entities may adopt early but not earlier than the effective date for public entities.

Early adoption is permitted for companies reporting under IFRS.