In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued their much-anticipated converged standard on revenue recognition. The FASB issued Accounting Standards Update (ASU) No. 2014-09, and the IASB issued International Financial Reporting Standard (IFRS) 15, both titled “Revenue From Contracts With Customers.” With only minor differences, the joint standard represents a single, global, principles-based revenue recognition model. The new guidance will affect almost every entity that recognizes revenues from contracts with customers.
The far-reaching impact of the new revenue recognition standard will affect different industries in different ways. To be ready when the new guidance goes into effect, financial executives need to understand the potential impacts of the coming changes and determine the best way to implement the new guidance in their organizations.