This blog features episodes two and three of our Weapons of Mass Construction instructional video series. We created this series as an easy-to-access, convenient resource featuring topics that can help your company’s bottom line, and help you stay current on key issues affecting the Construction Industry.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”). The purpose of the new guidance was to provide a comprehensive, industry-neutral revenue recognition model intended to increase financial statement comparability across companies and industries. It is replacing industry and transactional specific guidance that could result in different accounting for economically similar transactions.
The core principle of Topic 606 requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The new standard will affect almost all companies to some extent and the significance of the change will vary depending on industry and current accounting practices. There are a couple of carve outs for industries that are within other standards such as leases, insurance and financial instruments.
Some companies and industries will see very little change in the way that revenue is recognized in their financial statements under the new standard. One industry that will see significant change is the construction industry. The effort to identify potential changes and transition to the new guidance will likely take more time and resources than most companies would typically expect – and certainly more than most accounting standards issued in recent memory.
Our two-part webinar series describes how this new standard will affect your construction company in more detail.
What to Expect: The New Revenue Recognition Standard – Part 1
What to Expect: The New Revenue Recognition Standard – Part 2
Disclaimer: To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document or video is not intended for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
Here are other episodes of our Weapons of Mass Construction video series: