Jan. 12 Webinar: New Revenue Recognition for Contractors
The new revenue recognition standards issued by the FASB present fundamental changes to how companies recognize revenue from contracts. It is imperative that companies work to identify appropriate documentation and implement data-gathering practices, and fully understand how their financial statements will be affected and what the possible tax implications are.
Public companies will need to comply with the new standards starting with annual reporting periods beginning after December 15, 2017, and nonpublic companies will need to comply starting with annual reporting periods beginning after December 18, 2018.
From a top-sided view, the new standard requires companies to recognize revenue:
- When promised goods or services are transferred to customers
- In the amount of consideration to which the company expects to be entitled
To do this, companies will follow a five-step process outlined by the FASB:
- Identify the Contract
- Identify Performance Obligations
- Determine the Transaction Price
- Allocate the Transaction Price
- Recognize the Revenue
Businesses will also need to determine what transition approach makes the most sense for their particular circumstances:
- Full Retrospective: All reporting periods presented are reported under the new standard and the entity is required to disclose any prior-period information that has been adjusted.
- Modified Retrospective: Only the initial period of adoption needs to be reported under the new revenue model; other periods would remain presented under existing GAAP.
Other required disclosures, regardless of whether you choose the full or modified retrospective approach include:
- Disaggregated revenue information by customer type, geographic region, product line, etc.
- Contract balances information, including significant changes in contract assets and liabilities
- Timing of future revenue recognition, including the amount of transaction price allocated to unsatisfied performance allocations
Sax Webinar: New Revenue Recognition for Contractors
January 12, 2018 | 11:00 am – 12:00 pm
The Sax Construction Practice will be holding an in-depth webinar on January 12, 2018 to explain the changes to revenue recognition and discuss how contracts should be structured and the transitioning options for financial statements to best equip contractors moving forward.
For more information or to register, please contact Bianca Madrigal at [email protected].