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The FASB’s much-anticipated final standard on revenue recognition has been issued. FASB Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers: Topic 606, is the culmination of a joint project with the IASB which simultaneously issued IFRS 15, Revenue from Contracts with Customers. The issuance of these documents completes the joint effort by the FASB and the IASB to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and IFRS.
The new revenue recognition guidance affects all entities that either enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or leasing contracts). This ASU will supersede the current revenue recognition requirements found in Topic 605, Revenue Recognition, and does away with most industry-specific guidance that has been developed over several decades.