The new revenue recognition standard is rapidly approaching with implementation only months away. If your distribution channels are simplistic in nature and your contracts are typically simplistic or generally simple purchase orders, you probably won’t have any significant impact.
On the other hand, if any of these items apply, your accounting for revenue is likely to change or become more complex under the new model:
- Your contracts are:
- Voluminous and complex,
- Contain multiple deliverables,
- Extend over multiple reporting periods, and
- Have modifications
- You manufacture custom products with very few alternative uses
In addition, if you have significant contract costs or variable considerations (rebates, discounts, bonuses or a right of return) then there is evaluation of contracts that must be completed. Our experienced team can assist you with this analysis.
Resources for you
To help you get started making a smooth transition to the new revenue model, we’ve put together an e-Book outlining the new standard, how to apply it, practical considerations, accounting examples and much more. There is guidance specifically for manufacturers. It’s easy to download the most updated version of the e-Book right now.
Kevin C. Bach, CPA, CVA