Revenue Recognition

Implementing the revenue recognition requirements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance.


The effective date for public registrants has been deferred to 2018 for calendar year-end (annual reporting periods beginning after December 15, 2017). Early adoption as of the original effective date (2017 for calendar year-end) is permitted. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The delayed effective date and transition options are intended to allow companies a reasonable timeframe to comply. However, addressing some areas of the FASB Accounting Standards Codification may require longer lead-time, particularly related to revenue or billing systems where separation and/or allocation changes may be required, so companies should perform a preliminary analysis of the new requirements on a timely basis.

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Considerations and challenges

The changes may present complexity for companies in various industries. Examples of some of the challenges are:

  • Bundled goods and services
  • Transaction price calculations
  • Contract considerations (i.e., contract combinations and modifications)
  • Capitalization of costs to acquire customer contracts
  • Disclosures
  • Tax

Organizations may need to consider other project needs, including:

  • Implementation of updated or new systems, processes and controls, where required
  • Effective training and communication of new requirements
  • Effective program and resource management related to this effort


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Getting started

Some effective first steps to consider as you begin to evaluate the implications of the new FASB standard may include:

  • Evaluating significant revenue streams and key contracts to identify the specific revenue recognition changes required and the specific business units where these changes may have the greatest impact
  • Addressing the longer lead-time areas where new calculation engines or revised allocation processes may be required
  • Esablishing a granular project plan and roadmap to manage the effort across multiple business unites and countries

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Learn more

Below are links to resources that provide more details about revenue recognition accounting:

Please visit for a more comprehensive collection of news and publications related to the new revenue recognition standard, ASC 606-related guidance on revenue-generating activities, and guidance on the converged IFRS and GAAP standards.

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