New Revenue Recognition Standards ASC 606ndhsshare1
Dear Colleague,
As CFO’s prepare to address the new Standard for revenue recognition as required by ASC 606, “Revenue from Contracts with Customers,” they will need to adopt new tactics for managing revenue, and systems to support the Standard. Not only are the narratives of “when? and “how much?” revenue to recognize changed, but broader changes in the economy including subscriptions, pricing models, and disclosures driving changes in how CFO’s maintain their financial systems to support operations and reporting.
We have summarized the core principal, and information relevant to the upcoming changes to both the FASB and IASB treatment of revenue recognition for your review. We look forward to discussing these changes with you, and helping you to consider your preparedness for ASC 606.
Best Regards, Seth Pomeroy, CPA, MIS
seth@ndhcpa.com / 312.461.0505
Oracle Revenue Management Cloud Services | what is ORMB? | revenue management...CLTConsultingService
Webinar on Oracle Revenue Management Cloud Services
Every Oracle ERP Professional need to know about Revenue Management Cloud Services
Agenda
What every ERP Consultant to know about RMCS
Why RMCS/Concept
Benefit of RMCS
RMCS Configuration
User Case
Business Flow
Follow KnowOracle-
KnowOracle Facebook Group:- https://www.facebook.com/groups/KnowOracle/
Oracle ERP Coach Facebook Page:- https://www.facebook.com/CloudERPCoach/
KnowOracle Linkedin Group:- https://www.linkedin.com/groups/8616115/
New Revenue Recognition Standards ASC 606ndhsshare1
Dear Colleague,
As CFO’s prepare to address the new Standard for revenue recognition as required by ASC 606, “Revenue from Contracts with Customers,” they will need to adopt new tactics for managing revenue, and systems to support the Standard. Not only are the narratives of “when? and “how much?” revenue to recognize changed, but broader changes in the economy including subscriptions, pricing models, and disclosures driving changes in how CFO’s maintain their financial systems to support operations and reporting.
We have summarized the core principal, and information relevant to the upcoming changes to both the FASB and IASB treatment of revenue recognition for your review. We look forward to discussing these changes with you, and helping you to consider your preparedness for ASC 606.
Best Regards, Seth Pomeroy, CPA, MIS
seth@ndhcpa.com / 312.461.0505
Oracle Revenue Management Cloud Services | what is ORMB? | revenue management...CLTConsultingService
Webinar on Oracle Revenue Management Cloud Services
Every Oracle ERP Professional need to know about Revenue Management Cloud Services
Agenda
What every ERP Consultant to know about RMCS
Why RMCS/Concept
Benefit of RMCS
RMCS Configuration
User Case
Business Flow
Follow KnowOracle-
KnowOracle Facebook Group:- https://www.facebook.com/groups/KnowOracle/
Oracle ERP Coach Facebook Page:- https://www.facebook.com/CloudERPCoach/
KnowOracle Linkedin Group:- https://www.linkedin.com/groups/8616115/
Clarifications to IFRS 15
Revenue from Contracts with Customers
Clarifications to IFRS 15
Revenue from Contracts with Customers
Clarifications to IFRS 15
Revenue from Contracts with Customers
The published document gives overall view of OTC, is the end-to-end business process for receiving and processing customer orders. It also gives accounting and technical insight for Oracle application R12 OTC cycle.
Oracle iProcurement is a self service based requisitioning application that controls employee purchasing. It is a key component of oracle advanced procurement, the integrated suite that dramatically cuts all the supply chain management costs. The Oracle iProcurement functionality provides the essentials for the ordering portion of the procurement process. This includes catalog content management, requisitioning, purchase order creation, and receiving orders. This webinar will deal in brief about the benefits and usages of Oracle iProcurement.
Agenda:
- Procurement process: Oracle iProcurement
- Indirect and Direct Sourcing
- Why are we switching to iProcurement?
- Various Benefits
- Oracle iProcurement Release 12 Enhancements
- Oracle iProcurement Overview
- Oracle iProcurement in Comprehensive Procure-to-Pay Flow
- Core Features of Oracle iProcurement
- Oracle Service Procurement Integration
Five Criteria for Designing a Chart of Accountseprentise
A useful chart of accounts provides flexibility for recording and reporting financial information, allows uniform management, and enhances communication. Five fundamental criteria for chart of accounts design in Oracle E-Business Suite will allow your business to create a forward-thinking chart of accounts to optimize growth and flexibility, while minimizing maintenance. Learn these criteria and how to design your own chart of accounts.
Website: www.eprentise.com
Twitter: @eprentise
Google+: https://plus.google.com/u/0/+Eprentise/posts
Facebook: https://www.facebook.com/eprentise
IFRS 15 - the new revenue recognition standard EY Belgium
The IASB and the FASB have jointly issued a new revenue standard, IFRS 15 Revenue from Contracts with Customers, which will replace the existing IFRS and US GAAP revenue guidance.Find out more in our comprhensive brochure.
Revenue recognition
Academic Resource Center
Revenue recognition Page 2
General
► This new guidance will supersede almost all existing revenue guidance under US
GAAP (including industry guides) and IFRS.
► The AICPA has formed various industry task forces to help develop non-authoritative
guidance.
► The FASB and IASB announced the formation of a joint transition resource group
(TRG) that will be responsible for informing the Boards about interpretive issues that
arise as companies implement the revenue standards. The TRG will not issue
guidance.
The FASB and IASB issued new guidance on accounting for revenue
recognition, Revenue Recognition – Revenue from Contracts with
Customers.
► FASB – ASC 606 (ASU 2014-09)
► IASB – IFRS 15
May 2014
Academic Resource Center
Revenue recognition Page 3
General
► ASC 606 applies to both public and non-public entities. For non-public entities, there is
some specific relief related to disclosures, transition and the effective date.
► At the December 5, 2016 AICPA National Conference on Current SEC and PCAOB
Developments, Sylvia E. Alicea, a professional accounting fellow of the office of the chief
accountant (OCA) made the following comments:
“SAB Topic 13 will continue to apply to registrants prior to their adoption of the new
revenue standard so it will continue to be relevant until all registrants have completed their
transition. New guidance will be provided, as needed. However, when OCA evaluates
implementation-related consultations under U.S. GAAP, our starting point is the new
revenue standard (and any subsequent amendments) as issued by the FASB. Therefore, I
believe registrants should also apply that model (as opposed to SAB Topic 13) when
evaluating their revenue arrangements for adoption of Topic 606.”
► IFRS 15 does not specifically apply to non-public entities. These non-public entities may
apply IFRS for Small and Medium-Sized Entities.
Academic Resource Center
Revenue recognition Page 4
Effective date and adoption methods
US GAAP
► For US public entities, certain not-for-profit entities and
certain employee benefit plans, the guidance is effective
for annual periods beginning after December 15, 2017.
Early adoption is permitted for annual periods beginning
after December 15, 2016.
► All other US entities are required to apply the standard to
annual periods beginning after December 15, 2018 but
can also early adopt beginning after December 15, 2016.
IFRS
► The guidance is effective for annual
periods beginning on or after
January 1, 2018.
► Early adoption is permitted. Early
adoption was permitted when IFRS
15 was originally issued.
The adoption methods available for both US GAAP and IFRS include the full retrospective approach
and the modified retrospective approach. These are further explained on the following slide.
Academic Resource Center
Revenue recognition Page 5
Effective date and adoption methods
Key .
Clarifications to IFRS 15
Revenue from Contracts with Customers
Clarifications to IFRS 15
Revenue from Contracts with Customers
Clarifications to IFRS 15
Revenue from Contracts with Customers
The published document gives overall view of OTC, is the end-to-end business process for receiving and processing customer orders. It also gives accounting and technical insight for Oracle application R12 OTC cycle.
Oracle iProcurement is a self service based requisitioning application that controls employee purchasing. It is a key component of oracle advanced procurement, the integrated suite that dramatically cuts all the supply chain management costs. The Oracle iProcurement functionality provides the essentials for the ordering portion of the procurement process. This includes catalog content management, requisitioning, purchase order creation, and receiving orders. This webinar will deal in brief about the benefits and usages of Oracle iProcurement.
Agenda:
- Procurement process: Oracle iProcurement
- Indirect and Direct Sourcing
- Why are we switching to iProcurement?
- Various Benefits
- Oracle iProcurement Release 12 Enhancements
- Oracle iProcurement Overview
- Oracle iProcurement in Comprehensive Procure-to-Pay Flow
- Core Features of Oracle iProcurement
- Oracle Service Procurement Integration
Five Criteria for Designing a Chart of Accountseprentise
A useful chart of accounts provides flexibility for recording and reporting financial information, allows uniform management, and enhances communication. Five fundamental criteria for chart of accounts design in Oracle E-Business Suite will allow your business to create a forward-thinking chart of accounts to optimize growth and flexibility, while minimizing maintenance. Learn these criteria and how to design your own chart of accounts.
Website: www.eprentise.com
Twitter: @eprentise
Google+: https://plus.google.com/u/0/+Eprentise/posts
Facebook: https://www.facebook.com/eprentise
IFRS 15 - the new revenue recognition standard EY Belgium
The IASB and the FASB have jointly issued a new revenue standard, IFRS 15 Revenue from Contracts with Customers, which will replace the existing IFRS and US GAAP revenue guidance.Find out more in our comprhensive brochure.
Revenue recognition
Academic Resource Center
Revenue recognition Page 2
General
► This new guidance will supersede almost all existing revenue guidance under US
GAAP (including industry guides) and IFRS.
► The AICPA has formed various industry task forces to help develop non-authoritative
guidance.
► The FASB and IASB announced the formation of a joint transition resource group
(TRG) that will be responsible for informing the Boards about interpretive issues that
arise as companies implement the revenue standards. The TRG will not issue
guidance.
The FASB and IASB issued new guidance on accounting for revenue
recognition, Revenue Recognition – Revenue from Contracts with
Customers.
► FASB – ASC 606 (ASU 2014-09)
► IASB – IFRS 15
May 2014
Academic Resource Center
Revenue recognition Page 3
General
► ASC 606 applies to both public and non-public entities. For non-public entities, there is
some specific relief related to disclosures, transition and the effective date.
► At the December 5, 2016 AICPA National Conference on Current SEC and PCAOB
Developments, Sylvia E. Alicea, a professional accounting fellow of the office of the chief
accountant (OCA) made the following comments:
“SAB Topic 13 will continue to apply to registrants prior to their adoption of the new
revenue standard so it will continue to be relevant until all registrants have completed their
transition. New guidance will be provided, as needed. However, when OCA evaluates
implementation-related consultations under U.S. GAAP, our starting point is the new
revenue standard (and any subsequent amendments) as issued by the FASB. Therefore, I
believe registrants should also apply that model (as opposed to SAB Topic 13) when
evaluating their revenue arrangements for adoption of Topic 606.”
► IFRS 15 does not specifically apply to non-public entities. These non-public entities may
apply IFRS for Small and Medium-Sized Entities.
Academic Resource Center
Revenue recognition Page 4
Effective date and adoption methods
US GAAP
► For US public entities, certain not-for-profit entities and
certain employee benefit plans, the guidance is effective
for annual periods beginning after December 15, 2017.
Early adoption is permitted for annual periods beginning
after December 15, 2016.
► All other US entities are required to apply the standard to
annual periods beginning after December 15, 2018 but
can also early adopt beginning after December 15, 2016.
IFRS
► The guidance is effective for annual
periods beginning on or after
January 1, 2018.
► Early adoption is permitted. Early
adoption was permitted when IFRS
15 was originally issued.
The adoption methods available for both US GAAP and IFRS include the full retrospective approach
and the modified retrospective approach. These are further explained on the following slide.
Academic Resource Center
Revenue recognition Page 5
Effective date and adoption methods
Key .
IFRS 15 Revenue from Contracts with Customerssilsarthur91
In May 2014, almost 12 years since the work begun, the new standard on revenue recognition IFRS 15 Revenue from Contracts with Customers was published. The aim of this article is to present the key aspects of the new revenue recognition in a light and accessible way as well as to help in systematic preparation for the upcoming changes.
Annual update course covering:
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IFRICs 22 Foreign Currency Transactions and Advance Consideration
IFRIC 23 Uncertainty over Income Tax Treatments
Amongst other updates to standards during the past year.
IASB’s predecessor body has issued BAS 11 Construction Contracts [1979] & BAS 18 Revenue [1982] & SIC 31 Revenue - Barter Transactions Involving Advertising Services, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate & IFRIC 18 Transfers of Assets from Customers
All the above mentioned standards cover their own areas & were revised subsequently. In order to address the concern/gap (risen time to time), specific guidelines through SIC & IFRIC were issued. IASB (and its predecessor) had relentlessly employed efforts to prescribe proper accounting treatments in these areas. There was understood gap with related GAAP issued by FASB. Finally IASB has undertaken project to bring convergence with FASB pronouncement/GAAP & integrate different standards in June 2002. After long time & due course of study of different accounting pronouncements/GAAP issued by various national/international standards setter/regulatory guidelines applied in different political boundary, knowledge sharing with different standards setters across the globe, inviting & consideration of comments from interested group, meeting with expert group/researcher, IASB has finally issued IFRS 15 in May 2014.
FASB Proposals Affecting Government ContractorsDecosimoCPAs
Robert Belcher and Ken Conner co-presented this PowerPoint at the 2012 RocketCity GovCon Conference hosted by Solvability in Huntsville, Ala. on Sept. 20, 2012.
The new revenue recognition guidance included in the FASB’s Accounting Standards Update 2014-09 and in the IASB’s IFRS 15 creates a new, principle-based revenue recognition framework that affects nearly every revenue-generating entity, including life sciences arrangements. To help your company get started, this overview outlines key features of the new standard.
Learn more - http://gt-us.co/1JroSHG
Streaser, S., Jialin Sun, K., Perez Zaldivar, I., & Ran, Z. (2014).docxflorriezhamphrey3065
Streaser, S., Jialin Sun, K., Perez Zaldivar, I., & Ran, Z. (2014). Summary of the New FASB and IASB Revenue Recognition Standards. Review Of Business, 35(1), 7-15.
Summary of the New FASB and IASB
Revenue Recognition Standards
Scott Streaser, Deloitte & Touche LLP, New York
[email protected]
Kevin Jialin Sun, The Peter J. Tobin College of Business, St. John’s University, New York
[email protected]
Ignacio Perez Zaldivar, Deloitte & Touche LLP, New York
[email protected]
Ran Zhang, St. John’s University, New York
[email protected]
Executive Summary
The joint task force of the Financial Accounting
Standards Board (FASB) and International
Accounting Standards Board (IASB) finalized its
project to develop a joint revenue recognition
standard on May 28th, 2014, when the FASB
and IASB issued Accounting Standards Update
(ASU) 2014-09 and IFRS 15, respectively (“the
Standard”). The new standard, Revenue from
Contracts with Customers, moves away from
the current risks and rewards model, and
adopts a contract- and control-based approach.
Specifically, an entity would be required
to identify a contract with a customer and
assign the transaction price to performance
obligations embedded in the contract.
Revenue can only be recognized when (or
as) a performance obligation is satisfied by
transferring the control of promised goods
or services to the customer. The standard
applies to all entities and replaces most current
industry-specific guidance.
While the provisions of the new revenue
recognition standard are substantially
converged under International Financial
Reporting Standards (IFRS) and U.S. Generally
Accepted Accounting Principles (U.S. GAAP),
minor differences continue to exist. Except
where specifically noted otherwise, this article
discusses the new framework and important
changes to the current revenue recognition
standards under U.S. GAAP only.
To illustrate the effect of the change in this
article, we apply the provisions of the new
revenue standard to a hypothetical contract
between a telecommunications company and
a customer, in which the company promises
to transfer a bundle of goods and services
consisting of: (1) a subsidized handset, and
(2) a non-cancellable service contract to the
customer for fixed consideration. The example
demonstrates that under the new standard,
revenue recognition of the bundled contract
will be accelerated when compared to current
revenue recognition guidance. Specifically,
revenue allocated to the sale of the handset
upon delivery will increase, and revenue later
will decrease.
Background
Since formally agreeing to work jointly on the
revenue project in 2002, the FASB and IASB
have collaborated on the joint task of issuing
a converged revenue recognition standard.
The goal of the task force is to develop a
more robust and consistent framework for
revenue recognition, as well as to increase the
comparability of revenue recognition practices
across entities, countries, and industries. The
boards issued Exposu.
Original air dates:
May 27, 2014 and June 12, 2014
The FASB's new standard on revenue recognition will impact most companies and their internal accounting practices. Are you ready? This new standard for revenue recognition does away with industry guidance in favor of a single contract based model. This will result in significant changes in internal accounting practices for virtually all industries. During this webinar, experts from CBIZ and Mayer Hoffman McCann will discuss requirements of the new standard; the implications of the standard to your business; and timing of the implementation.
What is the Impact of the New Standard on the Intermediate Accounting Course?Cengage Learning
Presented by: Jefferson P. Jones Auburn University and Donald P. Pagach North Carolina State University
This session will address why the new standard was issued, its impact on the intermediate accounting course, and guidance on how to teach the new standard in the intermediate accounting course. Authors Jeff Jones and Don Pagach will also discuss how the new standard will be addressed in the second edition of Wahlen/Jones/Pagach Intermediate Accounting 2e.
2018-07 Systems Integration Best Practices for Integrating Your Business Appl...Raffa Learning Community
How much time does your organizations spend getting data to and from critical business systems such as your donor management, association management, membership and accounting applications? What about time sheets, expense reports and payroll data? Have you made customizations to your systems that make packaged integrations difficult to work with? In this session we will share considerations, best practices and use cases from actual customer integrations that may help you tackle your next integration project.
Join Raffa Technology & BI360 for an informative session on best practice approaches to managing your budget process beyond Microsoft Excel. Come learn how you can help your organization increase productivity, insight and decision making while decreasing the manual keying and inaccuracies inherent with Microsoft Excel. This seminar includes a presentation of the BI360 budgeting and reporting software.
In today’s accounting environment, there is mounting pressure to run leaner while becoming more effective than ever. Meeting deadlines, reviewing or preparing reconciliations and providing support requires new approaches to mitigating errors and compromising the integrity of your SOFP and SOA. It doesn’t have to be that way.
Join nonprofit industry leader Raffa, PC and BlackLine to discover a simpler way to perform your reconciliation process that allows you to focus on analysis, risk mitigation, and value creation for your organization.
Not every organization can afford to have a full time CIO on staff. But someone will be fulfilling the role, even without the title. This seminar will help you understand the role a CIO fulfills within your organization, the areas you may not be addressing without a CIO, the risks and opportunities mitigated by the presence of a CIO, and the new world of outsourced IT.
Additionally, we will discuss if your organization can thrive without the latest technology, whether your IT team is doing what they should be, how your IT infrastructure measures up to best practices, and what technology you may be missing out on.
With the ever-increasing threat of viruses, security breaches, and cyber theft, it is important to understand the basics of network and internet security. In this session, you will learn how to pass the security portion of your audit and how to protect your hardware. We will also discuss security in the cloud and Privacy Laws.
This class is beneficial to IT, Operations, and Administrative professionals.
Adam Grant, in a recent Atlantic article, says it best: “People Don’t Actually Know Themselves Very Well.” Do you agree? He argues that your coworkers are much better at rating aspects of your personality than you are. Studying thousands of people at work show that coworkers are more than twice as accurate when asked to assess how stable, dependable, friendly, outgoing and curious you are. In this workshop, we will give you an opportunity to solicit feedback in advance of the workshop, reflect on feedback you’ve received, and provide a safe and confidential environment to explore your blind spots. Those blind spots may be related to the way you see yourself as a manager or leader or perhaps how you think about intergenerational differences. We’ll discuss the importance of self-awareness and provide some tools to help you integrate new knowledge about yourself in practical ways at work.
Not every organization can afford to have a full time CIO on staff. But someone will be fulfilling the role, even without the title. This seminar will help you understand the role a CIO fulfills within your organization, the areas you may not be addressing without a CIO, the risks and opportunities mitigated by the presence of a CIO, and the new world of outsourced IT.
Additionally, we will discuss if your organization can thrive without the latest technology, whether your IT team is doing what they should be, how your IT infrastructure measures up to best practices, and what technology you may be missing out on.
Keeping reserves for a “rainy day” is a good practice for all nonprofit institutions, but how much should your organization set aside? A percentage of annual budget? Three-to-six months? Our answer is: it depends. Each nonprofit is unique and can experience distinct unexpected circumstances that may affect its long-term financial health.
This session, led by mark Murphy of Raffa Wealth Management, will focus on how to conduct a risk assessment that will assist your nonprofit in quantifying financial risks and opportunities. Once completed, this risk assessment aims to assist in finding the appropriate reserve level for your unique organization.
Whether you are in the initial phases of creating your nest egg or revaluating longstanding reserve levels, this session is for you.
Help your organization make better informed decisions. Join the Raffa Technology team and Prophix to discover how best in class organizations are using financial automation to drive improved budgeting, strategic financial analysis and better business decision making.
Learn how organizations are automating the financial budget process to deliver more accurate and timely information in the financial planning process.
Not every organization can afford to have a full time CIO on staff. But someone will be fulfilling the role, even without the title. This seminar will help you understand the role a CIO fulfills within your organization, the areas you may not be addressing without a CIO, the risks and opportunities mitigated by the presence of a CIO, and the new world of outsourced IT.
Additionally, we will discuss if your organization can thrive without the latest technology, whether your IT team is doing what they should be, how your IT infrastructure measures up to best practices, and what technology you may be missing out on.
The OMB Uniform Guidance proposes a more fair and equitable treatment of nonprofits providing services under programs funded by the federal government. This requires every nonprofit earning federal funds, either directly or indirectly, to take actions to ensure compliance. Join us as we illustrate steps to create a culture of compliance and sustainability in the federally funded marketplace.
Presentation by Jared Jageler, David Adler, Noelia Duchovny, and Evan Herrnstadt, analysts in CBO’s Microeconomic Studies and Health Analysis Divisions, at the Association of Environmental and Resource Economists Summer Conference.
Understanding the Challenges of Street ChildrenSERUDS INDIA
By raising awareness, providing support, advocating for change, and offering assistance to children in need, individuals can play a crucial role in improving the lives of street children and helping them realize their full potential
Donate Us
https://serudsindia.org/how-individuals-can-support-street-children-in-india/
#donatefororphan, #donateforhomelesschildren, #childeducation, #ngochildeducation, #donateforeducation, #donationforchildeducation, #sponsorforpoorchild, #sponsororphanage #sponsororphanchild, #donation, #education, #charity, #educationforchild, #seruds, #kurnool, #joyhome
This session provides a comprehensive overview of the latest updates to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly known as the Uniform Guidance) outlined in the 2 CFR 200.
With a focus on the 2024 revisions issued by the Office of Management and Budget (OMB), participants will gain insight into the key changes affecting federal grant recipients. The session will delve into critical regulatory updates, providing attendees with the knowledge and tools necessary to navigate and comply with the evolving landscape of federal grant management.
Learning Objectives:
- Understand the rationale behind the 2024 updates to the Uniform Guidance outlined in 2 CFR 200, and their implications for federal grant recipients.
- Identify the key changes and revisions introduced by the Office of Management and Budget (OMB) in the 2024 edition of 2 CFR 200.
- Gain proficiency in applying the updated regulations to ensure compliance with federal grant requirements and avoid potential audit findings.
- Develop strategies for effectively implementing the new guidelines within the grant management processes of their respective organizations, fostering efficiency and accountability in federal grant administration.
ZGB - The Role of Generative AI in Government transformation.pdfSaeed Al Dhaheri
This keynote was presented during the the 7th edition of the UAE Hackathon 2024. It highlights the role of AI and Generative AI in addressing government transformation to achieve zero government bureaucracy
Jennifer Schaus and Associates hosts a complimentary webinar series on The FAR in 2024. Join the webinars on Wednesdays and Fridays at noon, eastern.
Recordings are on YouTube and the company website.
https://www.youtube.com/@jenniferschaus/videos
2. 1
COURSE UPDATE DATE: __SEPTEMBER 5, 2018
COURSE REVIEWED BY: _ERIC GLANTZ___________ ___
COURSE REVIEW DATE: __SEPTEMBER 8, 2018_________________
NASBA FIELD OF STUDY: _ACCOUNTING AND AUDIT______
3. COURSE AGENDA / PROGRAM CONTENT
2
• Introduction to FASB ASC 606
• Applicability
• Summary of technical guidance
• Interpretation
• Questions and answers
4. LEARNING OBJECTIVES
Financial Accounting Standards Board (FASB)
Accounting Standards Update (ASU) No. 2014-09
(Topic 606), Revenue from Contracts with
Customers and subsequent ASUs
– Be informed about the new accounting guidance included
in ASC 606, and our interpretation of its impact to nonprofit
organizations
– Most of the changes do not significantly impact the
fundamental accounting utilized by nonprofits (certain
contracts not with customers are excluded from ASC 606)
– Course will discuss the timeline and practical steps for
implementing ASC 606
– See also ASU 2015-14, 2016-08, 2016-10, and 2016-12
3
5. WHAT IS NOT COVERED IN THIS COURSE
4
Financial Accounting Standards Board (FASB)
Accounting Standards Update (ASU) No. 2018-08
(Topic 958), Clarifying the Scope and Accounting
Guidance for Contributions Received and Made
– Clarifying guidance to distinguish between contributions
and exchange transactions to determine which treatment is
applied
– Clarifying guidance to distinguish if conditions exist
associated with a contribution
– If an exchange transaction treatment determined to be
appropriate, then must apply ASC 606
6. INTRODUCTION
WHY?
• Remove inconsistencies and weakness in revenue
requirements
• Provide a robust framework for addressing revenue
issues
• Improve comparability across entities, industries,
jurisdictions, and capital markets
• Provide useful information to financial statement
users through note disclosures
• Simplify the preparation of financial statements by
reducing the number of requirements to which an
entity must refer
5
7. INTRODUCTION CONT.
WHO?
• Any entity that enters into contracts with customers
for the transfer of goods or services, or the transfer
of non-financial assets
– All entities: public, private, not-for-profit
• This guidance supersedes revenue recognition
requirements in Topic 605
6
8. INTRODUCTION CONT.
WHEN?
• Public entities:
• Required to adopt the revenue recognition standards for
reporting periods beginning after December 15, 2017 and
interim and annual reporting periods thereafter (i.e. fiscal
year 2018 for public entities with a December 31 year-end)
• All other entities:
• Required to adopt the revenue recognition standard for
annual reporting periods beginning on or after December
15, 2018, and interim reporting periods within annual
reporting periods beginning after December 15, 2019 (i.e.
fiscal year 2019 for non-public entities with a December 31
year-end)
• Early adoption is permitted
7
9. INTRODUCTION CONT.
WHAT?
• Core Principle:
• An entity should recognize revenue from contracts with
customers to depict the transfer of goods or services to
customers in an amount that reflects the consideration
(payment) to which the entity expects to be entitled in
exchange for those goods or services.
8
10. APPLICABILITY
• All contracts with customers, except:
• Lease contracts
• Insurance contracts
• Financial instruments
• Guarantees
• Non-monetary exchanges in the same line of business to
facilitate sales to customers
• Certain contracts not with customers are excluded
• Contributions
• Collaborative arrangements
9
11. CORE PRINCIPLE (TOPIC 606)
• Five Steps to Apply the Core Principle (FASB ASC
606-10-5-4):
– Step 1:Identify the contract with a customer
– Step 2: Identify the performance obligations in the
contract
– Step 3: Determine the transaction price
– Step 4: Allocate the transaction price across the various
performance obligations
– Step 5: Recognize revenue when or as the entity
satisfies a performance obligation
10
12. STEP 1: IDENTIFY THE CONTRACT
(TOPIC 606)
What is a contract? (FASB ASC 606-10-25-2 through
25-8)
– An agreement between two or more parties that creates
enforceable rights and obligations
– Can be written, oral, or implied by an entity’s customary
business practices
– A contract does NOT exist if each party to a contract has
unilateral enforceable right to terminate a wholly
unperformed contract
– If an agreement does not meet the criteria to be
considered a contract, an entity shall continue to assess
the agreement to determine if the criteria are
subsequently met
11
13. STEP 1: IDENTIFY THE CONTRACT CONT.
(TOPIC 606)
Contract Modification (FASB ASC 606-10-25-10
through 25-13)
– A contract modification can be accounted for as a
separate contract if additional promised goods or
services are distinct AND the price of the contract
increases by the standalone selling prices of the
additional goods or services
– Modification my also be accounted for as a termination
of the original contract and a creation of a new contract
OR as part of the existing contract (if the remaining
goods or services are not distinct).
12
14. STEP 2: IDENTIFY PERFORMANCE
OBLIGATIONS (TOPIC 606)
What are performance obligations? (FASB ASC 606-
10-25-14 through 25-22)
– Each promise to transfer to the customer either:
1. A good or service (or a bundle of goods or services) that is
distinct, or
2. series of distinct goods or services that are substantially the
same and that have the same pattern of transfer to the
customer
– May include implicit promises based on the entity’s
customary business practices, published policies, or
specific statements
– Does not include activities that an entity must undertake
to fulfill a contract, unless those activities transfer a good
or service to the customer.
13
15. STEP 2: IDENTIFY PERFORMANCE
OBLIGATIONS CONT. (TOPIC 606)
A good or service is distinct if: (FASB ASC 606-10-
25-19 through 25-22)
– The customer can benefit from the good or service on its
own or together with other resources that are readily
available to the customer (i.e. the customer does not
need to obtain additional resources as well), AND
– The entity’s promise to transfer the good or service to
the customer is separately identifiable from the other
promises in the contract (i.e. the good or service is not
highly dependent on or highly integrated with other
goods or services in the contract)
If no distinct goods or services are identified, goods or
services should be combined until a distinct bundle is
identified
14
16. STEP 2: IDENTIFY PERFORMANCE
OBLIGATIONS CONT. (TOPIC 606)
Satisfaction of Performance Obligations: (FASB ASC
606-10-25-23 through 25-30)
– Performance obligations are satisfied by the transfer of a
promised good or service to a customer (when or as the
customer obtains control over the asset)
– Performance obligations can be satisfied over time if one
of the follow criteria are met:
1. The customer receives and consumes the benefits provided
by the entity’s performance as the entity performs
2. The entity’s performance creates or enhances an asset that
the customer simultaneously controls
3. The entity’s performance does not create an asset with an
alternative use to the entity and the entity has an
enforceable right to performance completed to date
– Otherwise, performance obligations are satisfied at a
point in time
15
17. STEP 3: DETERMINE THE TRANSACTION
PRICE (TOPIC 606)
Determining the Transaction Price: (FASB ASC 606-
10-32-2 through 25-27)
– The transaction price is the amount of consideration to
which an entity expects to be entitled in exchange for the
transfer of promised goods or services
1. Excludes amounts collected on behalf of third parties (i.e.
sales tax)
– Transaction price may include fixed amounts, variable
amounts, or both
– When determining transaction price, assume that all
goods or services will be transferred to the customer as
promised with the existing contract terms
16
18. STEP 3: DETERMINE THE TRANSACTION
PRICE CONT. (TOPIC 606)
Variable Consideration: (FASB ASC 606-10-32-5
through 25-14)
– Consideration may vary because of discounts, rebates,
refunds, performance bonuses, conditions, etc.
– An entity shall estimate the amount of variable
consideration using either of the following methods
1. The expected value: sum of probability-weighted amounts in
a range of possible consideration amounts
2. The most likely amount: the single most likely amount in a
range of possible consideration amounts.
17
19. STEP 3: DETERMINE THE TRANSACTION
PRICE CONT. (TOPIC 606)
Variable Consideration: (FASB ASC 606-10-32-5
through 25-14)
– Only include variable consideration to the extent that a
significant revenue reversal is not expected to occur
once the uncertainty in variable consideration is resolved
– At the end of each reporting period, an entity should
update the estimated transaction price to represent any
changes during the reporting period
18
20. STEP 3: DETERMINE THE TRANSACTION
PRICE CONT. (TOPIC 606)
Existence of a Significant Financing Component:
(FASB ASC 606-10-32-15 through 25-20)
– When determining the transaction price, adjust the
amount of consideration for the effects of the time value
of money
– The objective is for an entity to recognize revenue at an
amount that reflects the price that a customer would
have paid for the goods or services had the customer
paid cash when (or as) they transfer to the customer.
19
21. STEP 3: DETERMINE THE TRANSACTION
PRICE CONT. (TOPIC 606)
Noncash Consideration: (FASB ASC 606-10-32-21
through 25-27)
– An entity shall measure any noncash consideration at
fair value
– If fair value cannot be reasonably estimated, the entity
shall measure the consideration by the standalone
selling price of the goods or services promised
20
22. STEP 4: ALLOCATING THE TRANSACTION
PRICE (TOPIC 606)
Allocating the transaction price to performance
obligations: (FASB ASC 606-10-32-28 through 32-45)
– Objective: To allocate the transaction price to each
performance oobligation(or distinct good or service) in an
amount that reflects the amount of consideration the
entity expect to be entitled to in exchange for those
goods or services
– Transaction price should be allocated on a relative
standalone selling price basis, to the extent that variable
consideration is not used
– Allocation of transaction price may not apply if a contract
has only one performance obligation
21
23. STEP 4: ALLOCATING THE TRANSACTION
PRICE CONT. (TOPIC 606)
Allocation based on standalone selling prices:
(FASB ASC 606-10-32-31 through 32-38)
– Determine the standalone selling price at contract
inception of each distinct good or service underlying
each performance obligation and allocate the transaction
price on in proportion to those prices
– Standalone Selling Price: The price at which an entity
would sell a promised good or service separately to a
customer
1. Can be directly observable or estimated
22
24. STEP 4: ALLOCATING THE TRANSACTION
PRICE CONT. (TOPIC 606)
Allocation based on standalone selling prices
(cont.) – Estimating the standalone selling price of
a good or service: (FASB ASC 606-10-32-34)
– Adjusted market assessment approach: Entity
evaluates its market and estimates the price that a
customer would be willing to pay for the good or service
– Expected cost plus a margin approach: Entity
forecasts its expected cost and adds an appropriate
margin
– Residual approach: Estimation of the standalone
selling price of a good or service (or bundle of goods or
services) based on the total transaction price and
backing out all known standalone selling prices included
in the transaction price.
23
25. STEP 4: ALLOCATING THE TRANSACTION
PRICE CONT. (TOPIC 606)
Allocation of variable consideration: (FASB ASC
606-10-32-39 through 32-45)
– Variable consideration (and subsequent changes) should
be allocated entirely to a performance obligation if:
1. The terms of a variable payment related specifically to the
satisfaction of the performance obligation
2. Allocating the variable amount of consideration is consistent
with the allocation objective
– Subsequent changes to transaction price are allocated
on the same basis as at contract inception (recognize in
the period that the transaction price changes)
1. Amounts allocated to satisfied performance obligations are
recognized as revenue (or a reduction in revenue) in the
period which the transaction price changes.
24
26. STEP 5: RECOGNIZE REVENUE
(TOPIC 606)
Recognize revenue as performance obligations are
satisfied.
– When revenue is recognized should have been
determined in Step 2 of this process
25
27. OTHER PRESENTATION MATTERS
(TOPIC 606)
• Contract Liability: An entity’s obligation to transfer
goods or services to a customer for which the entity
has received consideration (or an amount of
consideration is due) from the customer.
• Contract Asset: An entity’s right to consideration in
exchange for goods or services that the entity has
transferred to the customer.
– 606-10-45-5: This guidance uses the terms contract
asset and contract liability but does not prohibit the use
of alternative descriptions. If alternative descriptions are
used, the entity shall provide sufficient information for a
user to distinguish between receivables and contract
assets
26
28. OTHER PRESENTATION MATTERS CONT.
(TOPIC 606)
• Contract Asset Example: (FASB ASC 606-10-55-287
through 55-290)
On January 1, 20X8, an entity enters into a contract to transfer
Products A and B to a customer in exchange for $1,000. The contract
requires Product A to be delivered first and states that payment for the
delivery of Product A is conditional on the delivery of Product B, i.e. the
consideration of $1,000 is due only after the entity has transferred both
products to the customer. The entity does not have a right to
consideration that is unconditional (a receivable) until both products
are transferred.
The entity identifies the promises to transfer Products A and B as
performance obligations and allocates $400 to the transfer Product A
and $600 to the transfer Product. The entity recognizes revenue for
each respective performance obligation when control of the product
transfers to the customer.
When transfer of Product A occurs the entity recognizes $400 in
revenue and $400 of Contract Asset (because entity does not have a
unconditional right to the consideration). When Transfer of B occurs,
the entity recognizes $1,000 in receivable, reduces contract asset by
$400, and recognizes revenue of $600.
27
29. DISCLOSURE
(TOPIC 606)
• Objective: To disclose sufficient information to
enable users to understand the nature, amount,
timing, and uncertainty of revenue and cash flows
arising from contracts with customers.
– Contracts with Customers (partially applicable to non-
profits)
– Significant judgements, and changes in the judgements,
made in applying the guidance (not applicable to non-
profits)
– Any assets recognized from the costs to obtain or fulfil a
contract with a customer (not applicable to non-profits)
28
30. DISCLOSURE CONT.
(TOPIC 606)
• Contracts with Customers: (FASB ASC 606-10-50-
4 through 50-16)
– Disaggregation of revenue into categories
1. (unless it has issued bonds or is a conduit bond obligor) Not
required for not-for-profits
– Contract balances (opening and closing, activity during
the year)
1. Not required for not-for-profits (unless it has issued bonds or
is a conduit bond obligor)
– Performance obligations
1. See next slide for applicability to not-for-profits
– Transaction price allocated to the remaining
performance obligations
1. Not required for not-for-profits (unless it has issued bonds or
is a conduit bond obligor)
29
31. DISCLOSURE CONT.
(TOPIC 606)
• Performance Obligations: (FASB ASC 606-10-50-
12) – An entity shall disclose the following:
– When the entity typically satisfies its performance
obligations (i.e. upon shipment, upon delivery, as
services are rendered, etc.)
– The significant payment terms
– Nature of goods or services that the entity has promised
to transfer
– Obligations for returns, refunds, and other similar
obligations
– Types of warranties and related obligations
30
32. DISCLOSURE CONT.
(TOPIC 606)
• Significant Judgments in the Application of this
Guidance: (FASB ASC 606-10-50-4 through 50-16)
– For performance obligations satisfied over time: the
methods used to recognize revenue and an explanation
of why the methods provide a faithful description of the
transfer
– For performance obligations satisfied at a point in time:
significant judgments made in evaluating when a
customer gains control of promised goods or services
– Methods, inputs, and assumptions used to determine the
transaction price, assess the estimate of variable
consideration, allocation of the transaction price,
measure obligations for returns, refunds, etc.
31
33. IMPLEMENTATION
(TOPIC 606)
• How does this apply to my organization?
– Contributions: This guidance will have no effect on the
method of recording contributions (conditional or
unconditional) (Topic 958)
– Grants: is the transaction reciprocal (i.e. does the donor
receive commensurate value in return for the resources
provided)? If yes, apply Topic 606. If no, treat as a
contribution.
– Member Dues: Treatment will be similar to before the
new standard is effective. Entities must determine the
extent to which the transaction is reciprocal. Revenue
will be bifurcated on that basis with the reciprocal portion
treated per Topic 606, and the remainder treated as a
contribution (Topic 958).
32
36. This information may not be reproduced without written permission from
Raffa, P.C., 1899 L Street, NW, Suite 850, Washington, DC 20036 (202) 822-5000
For information for and
about nonprofits visit
www.iknow.org
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member visit
www.boardnetusa.org
CONTACT INFORMATION
• Visit our Web Site at www.raffa.com
• Eric Glantz, Partner Stacy Wu, Audit Manager
• Direct: 202-955-5412 Direct: 202-955-6706
• e-mail: EGlantz@raffa.com e-mail: SWu@raffa.com
35
#3: Highlight comparability between US and overseas entities
606-10-15-3: “An entity shall apply the guidance in this Topic to a contract only if the counterparty is a customer. A customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration…”
i.e. a contribution is not a contract with a customer
606-10-15-4: “A contract with a customer may be partially within the scope of this Topic and partially within the scope of other Topics…”
i.e. Membership dues (bifurcating revenue into contributions and exchange)
Performance Obligation: think “Deliverable”
Objective: To establish the principles that an entity should apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer (606-10-15-1)
Wholly Unperformed:
Entity has not yet transferred any promised goods or services to the customer
The entity has not yet received, and is not yet entitled to receive, any consideration in exchange for promised goods or services
Italicized guidance is referenced often throughout the guidance
3rd point – i.e. administrative activities
Italicized – most applicable criteria for our customers
Control of an asset: ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset
Methods for measuring progress (606-10-55-16 through 55-21)
Output methods
Surveys of performance completed to date
Appraisals of results achieved
Milestones reached
Time elapsed
Input methods
Resources consumed
Labor hours expended
Costs incurred
Time elapsed
If the consideration includes a variable amount, an entity shall estimate the amount of consideration
As a practical expedient, the entity does not need to adjust the transaction price for the effects of a financing component if the original expected period of performance (time between transfer of good/service and payment) of the contract is one year or less.
On last point: allocation may apply if the entity promised to transfer a series of distinct goods or services identified as a single performance obligation, AND the promised consideration includes variable amounts.
Approaches to estimate standalone selling price:
Adjusted Market Assessment: Entity evaluates the market and estimates the price a customer in that market would be willing to pay for those goods or services
Expected Cost Plus a Margin: Entity forecasts expected costs and adds an appropriate margin
Residual Approach: Total transaction price less sum of directly observable standalone selling prices (can only use if selling price is highly variable OR if it has not previously been sold on a standalone basis [i.e. selling price is not determined])
DISCOUNT: There is a discount if the sum of the standalone selling prices is greater than the Transaction Price. If discount is NOT related to only one or more performance obligations (see 606-10-32-37), discount is allocated proportionally.
Approaches to estimate standalone selling price:
Adjusted Market Assessment: Entity evaluates the market and estimates the price a customer in that market would be willing to pay for those goods or services
Expected Cost Plus a Margin: Entity forecasts expected costs and adds an appropriate margin
Residual Approach: Total transaction price less sum of directly observable standalone selling prices (can only use if selling price is highly variable OR if it has not previously been sold on a standalone basis [i.e. selling price is not determined])
DISCOUNT: There is a discount if the sum of the standalone selling prices is greater than the Transaction Price. If discount is NOT related to only one or more performance obligations (see 606-10-32-37), discount is allocated proportionally.
Objective: To allocate the transaction price to each performance objective (or distinct good or service) in an amount that reflects the amount of consideration the entity expect to be entitled to in exchange for those goods or services
Contract Liability: If a customer pays consideration or an entity has a right to an amount of consideration (unconditional), before the entity transfers a good or service to the customer, the entity shall present the contract as a contract liability.
Contract Asset: If an entity performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, the entity shall present the contract as a contract asset.
Point 4: practical expedient – an entity does not need to disclose if the obligation is part of a contract that has an original expected duration of one year or less OR the entity recognizes revenue in accordance with 606-10-55-18
Only disclosure required for NPOs in Contracts with Customers section
Note that this is not required for not-for-profits unless it has issued bonds or is a conduit bond obligor