New rules governing revenue recognition for contracts will go into effect for publicly held companies in 2018 and for private ones in 2019. The Financial Accounting Standards Board, which administers Generally Accepted Accounting Principles in the U.S. (US-GAAP) has issued ASC 606 and the International Accounting Standards Board, which administers International Financial Reporting Standards used in most other countries, has issued IFRS 15. The new rules will materially affect companies that use even moderately complex contracts in their dealings with customers, especially in the case of those that extend past one year. This includes contracts that for example are structured using tiered pricing or volume discounts, routinely involve modifications such as adding or dropping users, or allow seasonal changes to services.
Are you prepared for those changes? Has your accounting department made thenecessary adjustments to ensure compliance? Read the viewpoint and don't be caught off guard when the new rules go into effect.