This issuance of the new standard for revenue recognition finally happened in May 2014, and will replace the current guidance in US GAAP and IFRS for revenue recognition. The new revenue rules which represent a paradigm shift from a rules-based to a principles-based guidance can impact several facets of a business. Companies will need to adjust policies and design new processes to ensure compliance.

1. Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
The New World of Revenue
Recognition: A Deep Dive into
the 5 Steps to Recognition

2. Learning Objectives
After attending this event you will be able to:
• Identify the relevant changes in the new revenue
recognition guidance for your company
• Assess the technical aspects of the 5 Steps of revenue
recognition in the new standard
• Discover the implications of “rules-based” and
“principles-based” revenue recognition standards

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4. Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
The New World of Revenue
Recognition: A Deep Dive into the 5
Steps to Recognition
Jeff Tchir, CPA, Director of Revenue Accounting,
Silver Spring Networks

5. What You Will Hear From Me Today
• It’s been a long time coming
• There is a methodology to the 5 Steps
• Management will have more judgments to make
• Impact on business models will vary and impact will vary
within business models
– Some things will stay the same
– Some things will be a little different
– Some things will be a lot different
• Your business model should drive design and execution
of process, procedure and policy change

6. The Joint FASB/IASB Project

7. Background and Status
January 2002 –
FASB discusses
potential major
project on
revenue
recognition
June 2002 – IASB
adds revenue
recognition project
to its agenda
September 2002 –
formal agreement to
work jointly on the
project
2002 to 2008 - lots of
meetings and
discussion around the
basic framework and
model
December 2008 –
discussion paper
issued
Where it came from…

8. Background and Status
June 2010
Exposure
Draft
November
2011 re-
Exposure
Draft
January 2012
revised
Exposure
Draft
2012 to 2014 –
redeliberations May 2014
FINAL
STANDARD
Where it’s at…

9. The Core Principle

10. Core Principle
Principles Based Approach
“…an entity recognizes revenue to depict the transfer of
promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services.”
Steps to achieve the core principle will replace current US
GAAP and current IFRS with respect to revenue recognition.
Do not confuse this with the separate initiative that involves
allowing US filers with the SEC to file financial statements
prepared in accordance with IFRS.

11. Steps to Achieve the Core Principle
Step 1 • Identify the Contract(s)
Step 2 • Identify the Performance Obligations
Step 3 • Determine the Transaction Price
Step 4 • Allocate the Transaction Price
Step 5 the Obligation
• Recognize Revenue upon Satisfaction of

12. The New World of Revenue Recognition: A
Deep Dive into the 5 Steps to Recognition
Thank you for your interest in this presentation.
View the on-demand webinar or download the full
presentation at:
www.Proformative.com