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Author: C. A. Ambalika Singh
Publisher: Independently Published
ISBN: 9781983132131
Category :
Languages : en
Pages : 170
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Book Description
The New Revenue Recognition Standard is a joint bold move made by both the FASB and the IASB to give top-lines of companies, across industries, a common denominator. It is a ground-breaking shift from the fair value measure of vendor specific objective evidence ('VSOE') to measure revenue, to one which takes into account what consideration the entity really expects to be entitled to receive from the contract with a 'customer'. Collaborative arrangements would come under the scanner as the collaborator may not be acting as a 'customer'. Moreover, the terms 'client' and 'customer' would no longer be fungible.ASC 606 provides guidance that will apply to all entities, including non-public entities that previously did not have extensive guidance. IFRS differs in this respect as IFRS for Small and Medium-sized Entities is available for entities that do not have public accountability.The new standard broadens the definition of revenue to include newer concepts like costs to obtain and fulfil a contract, material rights and gain and loss from sale of non-financial assets. The revenue is recognised upon control transfer rather than on delivery/ transfer of risks and rewards and the standard introduces the concept of 'control transferred at a point in time' and 'control transferred over time'. The standard requires management to increase exercise of judgment and estimate variable consideration, after applying constraints. The hierarchy for estimating stand-alone selling prices has been done away with. Allocation of discounts and assessing collectability may undergo a change as the two would be analysed at the worm's eye view level of the performance obligation and not at the bird's eye view level of the contract. Early in 2017, we saw ASU 2017-01 and ASU 2017-05 narrowing the definition of 'business' and defining an 'In Substance Non financial asset', respectively. The new definition of business disqualifies a set as a business when all or substantially all of the fair value of the gross assets (acquired or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets- think early stage life sciences companies, real estate and shipping companies. Further the new definition of business requires an input and a substantive process that together significantly contribute to the ability to create output- all of which should be acquired and evaluation of whether a market participant is able to replace the missing elements has been done away with. Further cost savings would not qualify as an output, which would be aligned with outputs described in ASC 606. The overall assessment of a business however still continues to be done from a market participant's angle and the buyer's and seller's intentions do not affect the analysis- same as today, except that the requirement of assessing whether a market participant would be able to replace missing elements has been done away with. These two ASUs impact the new revenue recognition standard from the point of view of a sale of non-financial assets to a customer- where the interest in an entity does not fall under the new definition of business but within the definition of essentially a non-financial asset.The new revenue recognition standard affects more than just revenue and impacts the business processes and results in dual SOX testing during the transition phase. With sufficient training, discussion and planning, all managements will be able to do the 'heavy lifting'.
Author: C. A. Ambalika Singh
Publisher: Independently Published
ISBN: 9781983132131
Category :
Languages : en
Pages : 170
Get Book Here
Book Description
The New Revenue Recognition Standard is a joint bold move made by both the FASB and the IASB to give top-lines of companies, across industries, a common denominator. It is a ground-breaking shift from the fair value measure of vendor specific objective evidence ('VSOE') to measure revenue, to one which takes into account what consideration the entity really expects to be entitled to receive from the contract with a 'customer'. Collaborative arrangements would come under the scanner as the collaborator may not be acting as a 'customer'. Moreover, the terms 'client' and 'customer' would no longer be fungible.ASC 606 provides guidance that will apply to all entities, including non-public entities that previously did not have extensive guidance. IFRS differs in this respect as IFRS for Small and Medium-sized Entities is available for entities that do not have public accountability.The new standard broadens the definition of revenue to include newer concepts like costs to obtain and fulfil a contract, material rights and gain and loss from sale of non-financial assets. The revenue is recognised upon control transfer rather than on delivery/ transfer of risks and rewards and the standard introduces the concept of 'control transferred at a point in time' and 'control transferred over time'. The standard requires management to increase exercise of judgment and estimate variable consideration, after applying constraints. The hierarchy for estimating stand-alone selling prices has been done away with. Allocation of discounts and assessing collectability may undergo a change as the two would be analysed at the worm's eye view level of the performance obligation and not at the bird's eye view level of the contract. Early in 2017, we saw ASU 2017-01 and ASU 2017-05 narrowing the definition of 'business' and defining an 'In Substance Non financial asset', respectively. The new definition of business disqualifies a set as a business when all or substantially all of the fair value of the gross assets (acquired or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets- think early stage life sciences companies, real estate and shipping companies. Further the new definition of business requires an input and a substantive process that together significantly contribute to the ability to create output- all of which should be acquired and evaluation of whether a market participant is able to replace the missing elements has been done away with. Further cost savings would not qualify as an output, which would be aligned with outputs described in ASC 606. The overall assessment of a business however still continues to be done from a market participant's angle and the buyer's and seller's intentions do not affect the analysis- same as today, except that the requirement of assessing whether a market participant would be able to replace missing elements has been done away with. These two ASUs impact the new revenue recognition standard from the point of view of a sale of non-financial assets to a customer- where the interest in an entity does not fall under the new definition of business but within the definition of essentially a non-financial asset.The new revenue recognition standard affects more than just revenue and impacts the business processes and results in dual SOX testing during the transition phase. With sufficient training, discussion and planning, all managements will be able to do the 'heavy lifting'.
Author: Ambalika Singh
Publisher: Independently Published
ISBN: 9781797702827
Category : Business & Economics
Languages : en
Pages : 202
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Book Description
The New Revenue Recognition Standard is a joint bold move made by both the FASB and the IASB to give top-lines of companies, across industries, a common denominator. It is a move from the fair value measure of vendor-specific objective evidence ('VSOE') to measure revenue, to one which takes into account what consideration the entity really expects to be entitled to receive from a contract with a 'customer'. The new standard broadens the definition of revenue to include newer concepts like contract costs incurred for transferring a good/ service, material rights and gain and loss from the sale of non-financial assets. There is specific guidance around contract combinations and contract modifications. 'Transfer of control to a customer' is the axis of the new revenue recognition standard. As control usually transfers before risks and rewards usually do, entities may witness an acceleration in revenue recognition. Collaborative arrangements have come under the scanner as the collaborator may be acting as a 'customer'. ASU 2018-18 issued in November 2018 removes the bias that amidst a risk and benefits sharing atmosphere of a collaborative arrangement, control of an output of an ordinary activity of one collaborator could be transferred to another collaborator for a consideration. Distinct goods/ services are now determined based on whether they are both individually distinct and are distinct within the context of the contract. Individually distinct goods/ services are now determined based on the characteristics of the goods or services themselves, instead of the way in which the customer may use the goods or services. VSOE rules are past tense and a good/ service may be distinct even if VSOE could not be established earlier. This may lead an increase or decrease in performance obligations, leading to difference in timing of revenue recognition. Increased judgement is needed for demarcating between a sale/ lease/ financing, in estimating variable consideration after applying constraints and in the capitalization and amortization of contract costs-especially in case of a principal versus agent situation. More disclosures are required. Provision for loss on contracts may apply to entities as ASC 606 amends ASC 605 for those paragraphs instead of superseding them. The position under IFRS is different as with the superseding of IAS 11 Construction contracts, the non-onerous provision for loss on construction contracts has been done away with. ASU 2017-01 and ASU 2017-05 narrowing the definition of 'business' and defining an 'In Substance Nonfinancial asset', respectively, impact the new revenue recognition standard from the point of view of a sale of non-financial assets to a customer- where the interest in an entity does not fall under the new definition of business but within the definition of essentially a non-financial asset. IFRS 3 has also been amended for a new definition of business and that does bring US GAAP and IFRS closer. The new standard interacts with the new leases standard and there may be a pit stop at ASC 606 before an entity transitions to the new leases standard. This book brings you the impacts from an exotic mix of industries as varied as aerospace and defense, engineering, media and entertainment, airlines, pharmaceuticals, health care, early-stage life sciences, software, construction and real estate, retail and e-commerce, hospitality, telecommunications, shipping, automotive, outsourcing and investment companies and promises deep learning. The new revenue recognition standard affects more than just revenue and impacts the business processes and results in dual SOX testing during the transition phase. With all the shuffling around the timing of payments being linked to the satisfaction of performance obligations, managements should properly assess their normal operating cycles and working capital. With sufficient discussions and training, all managements will be able to do the 'heavy lifting'.
Author: Ambalika Singh
Publisher: Independently Published
ISBN: 9781092289580
Category : Business & Economics
Languages : en
Pages : 222
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Book Description
The New Revenue Recognition Standard is a joint bold move initiated by both the FASB and the IASB to give top-lines of companies, across industries, a common denominator. It is a move from the fair value measure of measuring revenue, to one which takes into account what consideration the entity really expects to be entitled to receive from a contract with a 'customer'. The new standard broadens the definition of revenue to include newer concepts like costs to obtain and fulfil a contract, material rights and gain and loss from the sale of non-financial assets. There is specific guidance around contract combinations and contract modifications. Collaborative arrangements have come under the scanner as the collaborator may be acting as a 'customer'. The standard interacts with the new leases standard and lease and non-lease components of a contract would need to be separated. 'Transfer of control to a customer' is the axis of the new revenue recognition standard. As control usually transfers before risks and rewards usually do, entities may witness an acceleration in revenue recognition. Distinct goods/ services are now determined based on whether they are both individually distinct and are distinct within the context of the contract. This may lead an increase or decrease in performance obligations leading to difference in timing of revenue recognition. Provision for loss on contracts of the non-onerous kind for construction contracts have been done away with. Increased judgement is needed for demarcating between a sale/ lease/ financing, estimating variable consideration after applying constraints and in the capitalization and amortization of contract costs-especially in case of a principal versus agent situation. More disclosures are required. This book brings you the impacts from an exotic mix of industries as varied as aerospace and defense, engineering, media and entertainment, airlines, pharmaceuticals, health care, early-stage life sciences, software, construction and real estate, retail and e-commerce, hospitality, telecommunications, shipping, automotive, outsourcing and investment companies and promises deep learning. The new revenue recognition standard affects more than just revenue and impacts the business processes and results in dual SOX testing during the transition phase. With sufficient discussions and training, all managements will be able to do the 'heavy lifting'.
Author: Joseph R.
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) in May 2014, the new principles-based revenue recognition standard replaces prescriptive, industry-specific guidance, improving comparability across industries and throughout global capital markets. This report explains the new standard further. --
Author: Luis Benavides
Publisher:
ISBN:
Category :
Languages : en
Pages : 28
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Book Description
On May 28, 2014, after years of planning, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued joint revenue recognition standards, ASU 2014-09 (Topic 606) and IFRS 15. Through the project the boards sought to “flatten” the revenue recognition standard, alongside an overall improvement in cross-border financial reporting and analysis. This paper cross examines both current and future standards under U.S. GAAP, and discusses key areas of the new standard that will dramatically impact the financial reporting and operations sectors of organizations.
Author: Joseph R. Tort
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 22
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Book Description
Issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) in May 2014, the new principles-based revenue recognition standard replaces prescriptive, industry-specific guidance, improving comparability across industries and throughout global capital markets. This report explains the new standard further. --
Author: A Taub Scott
Publisher:
ISBN: 9780808059073
Category :
Languages : en
Pages : 0
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Book Description
Revenue Recognition Guide is a comprehensive reference manual covering key concepts and issues that arise in determining when and how to recognize revenue in accordance with US and International accounting standards. Revenue Recognition Guide clarifies revenue recognition concepts and principles, and provides insight into issues that have been addressed as the accounting profession prepares to adopt the new revenue recognition literature. This edition of the guide provides comprehensive discussion of the authoritative literature on revenue recognition that is included in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, and International Financial Reporting Standard 15, Revenue from Contracts with Customers. The book includes discussion, analysis, and example throughout, and includes excerpts from public filings illustrating many of the principles of the standards. How Is This Guide Organized? Within the 14 chapters of the book, the text includes references to the paragraphs of the authoritative literature that address key points. In addition, references are included to relevant examples in the accounting literature that highlight the application of the requirements. This book also includes a number of illustrations that focus on key points, and a number of Practice Pointers that highlight key consequences of the guidance and identify issues to watch for when dealing with certain revenue transactions. Organization Objectives and Framework Chapter 2, "Scope and Overview of Topic 606/IFRS 15," explains the objectives and core principles of the new revenue recognition standards, and provides a high-level discussion of the five-step model that frames the guidance on determining the amount of revenue and the timing of revenue recognition. Chapter 2, "Scope and Overview of Topic 606/IFRS 15," also discusses the scope of the new guidance. Chapters 3-7 provide a detailed discussion of each of the five steps in the model, including implementation guidance in the standard, as well as guidance that has resulted from discussions of the TRG and the IFRIC. Related Matters Chapter 8, "Continuing Involvement," discusses guidance in Topic 606/IFRS 15 on certain additional matters, including common contract terms such as warranties, rights of return, repurchase provisions, and options for additional goods and services. Chapter 9, "Costs of Contracts with Customers," addresses the guidance on costs of revenue transactions. Chapter 10, "Presentation," addresses matters of the presentation of revenue transactions in balance sheets and income statements, including discussion of whether to recognize transactions on a gross or net basis. Application to Common Arrangements Chapters 11-13 then explain how the model applies to common issues faced in the delivery of products, services, and intellectual property to customers. Explaining how the five steps apply to common transactions is intended to both provide practical guidance for readers and reinforce the understanding of the principles of the standard. Financial Reporting Chapter 14, "Disclosure," addresses disclosures required by the new literature that go far beyond the disclosure requirements that currently exist. This chapter also discusses revenue disclosures required in SEC filings in areas other than the financial statements.
Author: D. Nickson
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This article highlights areas in which the new accounting revenue recognition standard, ASC 606, is likely to have an effect on companies' transfer pricing analyses, such as in applying profit-based methods, under cost sharing, and in preparing country-by-country reports. They recommend proactive engagement between tax, finance, and other stakeholders as the standard is adopted to make sure any necessary actions or key decisions are addressed fully.
Author: Joanne Flood
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 240
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Book Description
Everything you need to understand and implement the new converged FASB-IASB revenue recognition standard Wiley Revenue Recognition provides an overview of the new revenue recognition standard and instructs financial statement preparers step-by-step through the new model, providing numerous, helpful application examples along the way. Readers will grasp the many new disclosures that will be required through the use of detailed explanations and useful samples, while electronic tools will be available to aid the preparer in implementing the standards and making the proper disclosures. The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are in the final stages of a decade-long project to clarify and converge revenue recognition standards. This new principles-based standard-which will affect the business practices of virtually every company worldwide-is designed to serve as one model applied consistently across most industries. This book guides professionals through the new standard. Offers a full explanation of over forty topics superseded by the new standard Includes digital ancillaries featuring measurement tools and GAAP and IFRS Disclosure Checklists Provides all the tools needed to implement the new revenue recognition standard Covers how the structure of contracts will be affected Wiley Revenue Recognition is a trusted, authoritative guide to the new FASB-IASB revenue recognition standard for CPAs and financial professionals worldwide.
Author: Scott Taub
Publisher:
ISBN: 9780808057413
Category :
Languages : en
Pages : 600
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Book Description
Revenue Recognition Guide is a comprehensive reference manual covering key concepts and issues that arise in determining when and how to recognize revenue in accordance with US and International accounting standards. Revenue Recognition Guide clarifies revenue recognition concepts and principles, and provides insight into issues that have been addressed as the accounting profession prepares to adopt the new revenue recognition literature. This edition of the guide provides comprehensive discussion of the authoritative literature on revenue recognition that is included in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, and International Financial Reporting Standard 15, Revenue from Contracts with Customers. The book includes discussion, analysis, and example throughout, and includes excerpts from public filings illustrating many of the principles of the standards. How Is This Guide Organized? Within the 14 chapters of the book, the text includes references to the paragraphs of the authoritative literature that address key points. In addition, references are included to relevant examples in the accounting literature that highlight the application of the requirements. This book also includes a number of illustrations that focus on key points, and a number of Practice Pointers that highlight key consequences of the guidance and identify issues to watch for when dealing with certain revenue transactions. Organization Objectives and Framework Chapter 2, "Scope and Overview of Topic 606/IFRS 15," explains the objectives and core principles of the new revenue recognition standards, and provides a high-level discussion of the five-step model that frames the guidance on determining the amount of revenue and the timing of revenue recognition. Chapter 2, "Scope and Overview of Topic 606/IFRS 15," also discusses the scope of the new guidance. Chapters 3-7 provide a detailed discussion of each of the five steps in the model, including implementation guidance in the standard, as well as guidance that has resulted from discussions of the TRG and the IFRIC. Related Matters Chapter 8, "Continuing Involvement," discusses guidance in Topic 606/IFRS 15 on certain additional matters, including common contract terms such as warranties, rights of return, repurchase provisions, and options for additional goods and services. Chapter 9, "Costs of Contracts with Customers," addresses the guidance on costs of revenue transactions. Chapter 10, "Presentation," addresses matters of the presentation of revenue transactions in balance sheets and income statements, including discussion of whether to recognize transactions on a gross or net basis. Application to Common Arrangements Chapters 11-13 then explain how the model applies to common issues faced in the delivery of products, services, and intellectual property to customers. Explaining how the five steps apply to common transactions is intended to both provide practical guidance for readers and reinforce the understanding of the principles of the standard. Financial Reporting Chapter 14, "Disclosure," addresses disclosures required by the new literature that go far beyond the disclosure requirements that currently exist. This chapter also discusses revenue disclosures required in SEC filings in areas other than the financial statements.
