The Financial Accounting Standards Board has released a proposed accounting standards update to clarify the guidance on performance obligations and licensing contained in the new revenue recognition standard.
The proposed ASU, Revenue from Contracts with Customers (Topic 606)—Identifying Performance Obligations and Licensing, includes targeted improvements based on input that FASB received from the Transition Resource Group for Revenue Recognition and other stakeholders.
FASB and the International Accounting Standards Board set up a joint Transition Resource Group after releasing their long-awaited converged revenue recognition standard last year. The goal of the transition group was to deal with implementation issues that companies might encounter as they got ready for the standard, which was supposed to take effect in late 2016 for companies using U.S. GAAP and early 2017 for companies using International Financial Reporting Standards.
Both boards recently proposed to defer the effective date for one year in response to the feedback they heard, mostly from U.S.-based companies (see FASB Proposes Deferral of Revenue Recognition Standard and IASB to Defer Revenue Recognition Standard for a Year).
The new proposal Tuesday from FASB seeks to proactively address areas in which diversity in practice potentially could arise, as well as to reduce the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis.
FASB is encouraging stakeholders to comment on the proposal by June 30, 2015.
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