“It’s Finally Here: FASB Issues New Revenue Recognition Standard,” Fall 2014 NASBP Surety Bond Quarterly
Home / News / “It’s Finally Here: FASB Issues New Revenue Recognition Standard,” Fall 2014 NASBP Surety Bond Quarterly
THE MODEL FOR revenue recognition in construction is changing with the Financial Accounting Standards Board (FASB) May 28, 2014, release of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). Since 2008, FASB and the International Accounting Standards Board (IASB) have been working jointly on developing a single principles-based model for recognizing revenue, with a goal of improving consistency of requirements, comparability of revenue recognition practices, and usefulness of disclosures.
Throughout the FASB process, NASBP, the Construction Financial Management Association (CFMA) and other interested organizations have been very involved in providing input on the impact of the new standard. The ASU eliminates all existing revenue recognition guidance under both U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), including industry-specific guidance, and significantly expands revenue recognition disclosures.
The required disclosure changes will include both quantitative and qualitative information about the amount, timing, and uncertainty of revenue from contracts with customers and the significant judgments used. There is limited relief offered to nonpublic companies on some of the qualitative disclosures.
There are some myths that have been rolling around the construction industry related to the changes in revenue recognition. Hopefully, many of these myths can be put to rest with the issuance of the final standard. The table in this article provides some of the highlights.
