Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals

The New World of Revenue Recognition: Accounting is Only the Tip of the Iceberg

• Understand key revenue recognition rule changes, and their potential impact on your company’s internal processes and systems

• Define your company’s roadmap to adopting new revenue recognition rules and rules changes relevant to your business

• Identify the important rules implementation milestones for your company

Learning Objectives

After attending this event you will be able to:

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Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals

The New World of Revenue Recognition: Accounting is Only the Tip of the IcebergKelley Wall, Director, RoseRyanMark Gervase, Cloud Financials Strategist, Intacct

Agenda

• Tip of the IcebergAn overview of the new revenue standard

• Below the SurfaceA look at key changes and challenges

• Steering the ShipAdvice for a successful implementation

Tip of the IcebergAn Overview of the New Revenue Standard

Tip of the IcebergEvolution of the New Revenue Rules

• 2002 – FASB begins work on new revenue recognition standard

• 2006 – FASB/IASB Memorandum of Understanding (MOU) to make rev rec a priority

• …lots of exposure drafts, comments, changes & lots of missed deadlines

• 5/28/2014– Final standard is issued

• 6/3/2014 – FASB/IASB announces Transition Resource Group (TRG)

• 7/18/2014 – First TRG meeting

Tip of the IcebergKey Implementation Dates

• Public companies: annual and interim periods beginning > 12/15/2016

• Private companies: one year deferral

• IPO track: JOBS Act allows EG Companies to defer to private company dates (optional)

• Early adoption:– Prohibited under US GAAP– Allowed under IFRS

• Adoption method:– Full Retrospective– Modified Retrospective

Tip of the Iceberg5 Steps to Revenue

1. Identify the contract with the customer

2. Identify the separate performance obligations

3. Determine the transaction price

4. Allocate the transaction price to separate performance obligations

5. Recognize revenue when each separate performance obligation is delivered

Tip of the IcebergCost Considerations

• Incremental costs to obtain a contract

• Costs to fulfill a contract

• Can expense <= one year

• Assets amortized consistent with transfer

• Recognize impairment immediately if deemed not recoverable

Below the SurfaceA Look at Key Changes & Challenges

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The New World of Revenue Recognition: Accounting is Only the Tip of the Iceberg