Scouring the web, there's a lot of information out there about the new FASB/IASB Revenue Recognition Standards, also known as Topic ASC 606, published in May of last year. This new standard will have great impact on software, and particularly Software-as-a-Service (SaaS), companies' accounting practices and business processes.
Most of our readers and customers (private companies and organizations in the US) are required to apply the new standard for reporting periods beginning after December 15th, 2017. Other schedules apply for public companies and companies using IFRS.
According to Delloite:
"The core principle of this Topic is that an entity recognizes revenue to depict the transfer of promised 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." - http://www.iasplus.com/en-us/standards/fasb/revenue/asc606
The new standard provides a 5 step process to apply in order to recognize revenue in accordance with the above principle.
Instead of reprinting the valuable guidance and explanations of others, we thought we'd share some good resources for those of you trying to get your heads around and plan for the new standard. Here's a list of some of those resources:
- Intacct's Philipp Suchan's introduction to the new standard
- Suchan's article which includes an illustrative example
- Deloitte's article on iasplus.com, with links to other more in-depth resources
- PwC's full guide to the codification
- AccountingWeb's article and background information
- Implementation and Learning Plan for the new Rev Rec Standard from the AICPA
AcctTwo is a leading consulting firm and reseller of cloud-based accounting and financial management software. AcctTwo’s sophisticated systems solve the issues growing middle market companies face today. AcctTwo also outsources back office processes, allowing clients to focus on the core competencies of their business. AcctTwo provides the people, processes, technology and office facilities to perform these functions, while allowing clients to collaborate interactively through an on-line portal.