Read more about the current Greenbook proposals. ...
This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.
On May 28, 2014, the Financial Accounting Standards Board and the International Accounting Standards Board issued guidance merging U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards treatment of revenue recognition in contracts with customers. Accounting Standards Update (ASU) 2014-09 seeks to align revenue recognition rules globally for entities in all industries.
As the new standard begins its transit toward its required adoption date in 2018 for public entities, and 2019 for nonpublic entities, transportation companies are encouraged to begin to understand the changes and anticipate their impact on the companies’ financial statements.
Under the new standard, entities in the transportation industry will follow these five steps:
The most significant impact under the new standard is that freight hauling revenue and associated expenses must be cut off at period-end, including shipments in process. Presently, freight hauling revenue and associated expenses are recorded upon delivery; however, transportation entities will now be required to assess shipments in process at year-end and determine the appropriate amount of revenue and expense to recognize on those shipments in process.
As stated in the ASU, “An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time if … the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.” Customers simultaneously receive and consume the benefits provided by freight hauling, as determined by the following scenario. If a carrier transports goods halfway to their destination, another carrier could transport the goods the remainder of their journey without having to re-perform the work completed by the first carrier.
For more information, visit the FASB webpage dedicated to the new revenue recognition standard. For more information on how the new rules will affect the transportation industry, contact us.
Read more about the current Greenbook proposals. ...
Learn more about the regional and national supply chain implications of the Baltimore Key Bridge collapse. ...
We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.
Ask us
[email protected]
p:412.261.3644
f:412.261.4876
[email protected]
p:614.621.4060
f:614.621.4062
[email protected]
p:571.380.9003