As seen in Philadelphia Business Journal
A: The new revenue recognition principles become effective for public businesses for periods beginning after December 15, 2017. The effective date for most other businesses is periods beginning after December 15, 2018.
The implementation of the principles will:
- Change revenue recognition to when control of the goods or services is transferred to the customer
- Provide a revenue recognition model that is more uniform across industries
- Allow for convergence of US and international accounting standards
- Establish guidelines for reporting useful information to users of financial statements concerning the nature, timing and uncertainty of revenues
Management should review the principles before they become effective. After reviewing the new principles, management should document the processes and controls of the revenue recognition cycle and test those controls to ensure they are operating effectively.
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