The FASB and IASB recently released converged revenue recognition standards related to customer contracts (ASU 2014-09 and IFRS 15, respectively) which are the culmination of a joint project. ASU 2014-09 takes effect in 2017 and establishes a comprehensive revenue recognition standard for virtually all industries in U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate, construction and software industries. TMO Consulting has established this resource center specific to U.S. GAAP to provide you with timely information for transitioning to the new standard and applying it to your organization. The new ASU is available and has been codified in ASC Topic 606. TMO Consulting is pleased to provide a practical summary of Topic 606, which includes examples, frequently asked questions, and TMO Consulting’s commentary and insight regarding application of the new standard.

The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. Entities will generally be required to make more estimates and use more judgment than under current guidance, which will be highlighted for users through increased disclosure requirements.