ASC 606 - Revenue from Contracts with Customers
Ever-increasing accounting oversight and regulation have become a way of life, typified by the FASB’s new accounting standard ASC 606, which seeks to merge U.S. GAAP (ASC 606) with international accounting standards (IFRS 15).
The new ASC 606 rules are here to stay and are effective for calendar year-end privately held companies on January 1, 2019. In addition, ASC 606 requires the same compliance as public companies (except for SEC disclosures).
ASC 606 introduces transformational changes to the revenue model that will undoubtedly cause challenges to many companies during the implementation period and beyond.
Companies will have to consider:
- New guidance in identifying performance obligations could lead to additional performance obligations
- Revenue recognition (pattern of delivery over time or point in time)
- Transaction price can be a fixed amount, but may also include variable consideration, such as price concessions, volume discounts, rebates, refunds to be estimated upfront
- Appropriate methodologies for allocating the transaction price to the performance obligations
- Calculating the standalone selling price (elimination of VSOE)
- Contract modifications (change in scope or price or both)
- Capitalization of costs to acquire customer contracts
- Intellectual property licensing (right to access or right to use)
- Principal versus agent considerations (control passes to the customer)
Benefits to You
With our experience, EisnerAmper’s ASC 606 team can help you conserve one of your most precious resources: time. We can help you avoid costly, time-consuming errors such as misapplying – and then correcting – the standard, as well as save you time by allowing you to grow your core business while we assist you with a timely, accurate and cost-effective ASC 606 implementation.
Are You Ready for ASC 606?
Review our ASC 606 readiness assessment to find out.
ASC 606 Readiness Assessment
- Have completed implementation plan and set milestone dates?
- Have identified internal and/or external resources to successfully understand and implement the required changes?
- Have identified significant contracts in which the timing of revenue could shift between years?
- Understand the impact on compensation strategies, performance metrics in compensation and bonus plans, earn-out clauses in acquisition agreements and sales commission arrangements?
- Have identified implications for income taxes and tax accounting?
- Dedicated team of professionals.
- ASC 606 planning and implementation experience covering all industries.
- Significant experience in helping publically traded companies adopt ASC 606.
- Thought leadership. Have led panels and written articles on ASC 606.