The American Institute of CPAs’ Financial Reporting Executive Committee has released for comment working drafts of revenue recognition implementation issues it has identified for the aerospace and defense industry and the investment asset management industry.
The working drafts of revenue recognition implementation issues will provide illustrative examples for how to apply the long-awaited revenue recognition standard released last year by the Financial Accounting Standards Board and the International Accounting Standards Board.
“The revenue recognition implementation issues are designed to be helpful for companies applying ASC 606 and making their own accounting policy decisions,” said AICPA senior technical manager Kim Kushmerick. “The implementation issues are consistent with the principles of ASC 606 and the FASB IASB Transition Resource Group.”
The final revenue recognition implementation issues will be included in a new Revenue Recognition Guide that the AICPA is developing, along with implementation issues for all 16 industries included in the AICPA revenue recognition effort.
FASB and the IASB issued the long-awaited revenue recognition accounting standard in May 2014. The new standard is designed to streamline accounting for revenue across industries and correct inconsistencies in existing standards and practices. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principles-based approach for determining revenue recognition. The core principle of the new revenue recognition standard is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
At the time the standard was released, FASB officials expressed the hope that groups like the AICPA would update their industry guides to reflect the changes in the new standard, even though the standard itself is not industry specific. FASB and the IASB have also set up a joint Transition Resource Group to identify implementation issues with the new standards. So far, they have recommended several amendments and a one-year delay in the effective date. Public entities must now adopt the standard for reporting periods beginning Dec. 15, 2017. Nonpublic entities must do so by Dec. 15, 2018.
Comments on the AICPA’s working draft are due by Dec. 31, 2015. Any comments on the aerospace and defense working draft should be sent to Kushmerick at email@example.com, while comments on the investment asset management working draft should be sent to Irina Portnoy at firstname.lastname@example.org.
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