New Revenue Recognition Guidance - Sooner or Later?

With the origin of the proposed revenue recognition standard Revenue from Contracts with Customers dating back to 2002 (with significant deliberations occurring for most of the past five years), the much-anticipated release of the final standard is now finally in sight. But when will it be effective?

While the final revenue standard is currently being composed, and is expected to be released in the second quarter of 2013, it will only be effective for annual reporting periods beginning on or after January 1, 2017 (January 1, 2018 for non-public entities). In addition, early application is prohibited. Of course, these dates are tentative until the final standard is actually issued.

The period of time from the expected issuance of the standard until its effective date is much longer than is typically the case. The unusual length of time (more than three years for public entities) is considered by many to be appropriate due to the unique attributes of the project, including the wide array of entities that will be affected and the potentially significant effects that the change in revenue recognition will have on other financial statement line items.

While 2017 or 2018 may seem like a long time from now, companies need at least three years to prepare their accounting and information systems and processes to capture the information necessary to comply with the new revenue recognition guidance, not to mention educate their personnel.

© 2013 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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