brief overview of the new fasb-iasb revenue recognition standard
Post on 09-Oct-2015
81 Views
Preview:
DESCRIPTION
TRANSCRIPT
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
1/20
INCOMING! BRIEF OVERVIEW
OF THE NEW FASB-IASBREVENUE RECOGNITION
STANDARDKurt S. Schulzke, JD, CPA, CFE
Associate Professor of Accounting & Business Law
Coles College of Business
October 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
2/20
NEW ASC TOPIC 606
Copyright Kurt S Schulzke 2014
ASC =AccountingStandardsCodification
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
3/20
TOPIC 606ALLEGED (BUTUNPROVEN) PRINCIPLE
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
4/20
ASC SUBTOPIC 606-10-25-2
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
5/20
BNAS TOP TEN Industry guidance replaced by legal
opinion & professional judgment
Topic 606 applies across the board &
requires expanded disclosure Transfer of control through satisfaction of
performance obligations is key
One contract may encompass more thanone performance obligation
Collectibility is a scope or contractexistence question, not a measurementquestion
THINGS TO WORRY A New rules require recognition of estimated
consideration if it is probable that subsechanges in the estimate will not require re
Changes to accounting for long-term con
Accounting for license revenue has chan
Allocation of transaction price to performobligations on the basis of stand-alone seno more VSOE of FV
Effective dates
Copyright Kurt S Schulzke 2014
Good high-levelsummary of thestandard but onlypoints to lurkingcontract law questions
http://www.bna.com/fasb-iasb-issued-m17179891012/ -
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
6/20
BNAS
HIGH-LEVEL T606 FLOWCH
Copyright Kurt S Schulzke 2014
http://www.bna.com/fasb-iasb-issued-m17179891012/ -
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
7/20
ITS ALL ABOUT CONTRACT LAWHTTP://BIT.LY/1SVAZFU
Copyright Kurt S Schulzke 2014
Deeper dicontract la
Topic 606,great flow606 revenrecognitio
http://bit.ly/1sVAZFuhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://bit.ly/1sVAZFu -
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
8/20
ASC Topic 606
SIDE-BY
COMP
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
9/20
Purported contract w/
customer
STEP 1
Review purported contract
for legal enforceability
and existence
(ED paras. 13 & 15)
Pass ED
paras. 13 & 15
tests?
Enforceability & existence
A. identify governing law & forum
(para. 13);
B. verify contract formation & validity
(para. 13);
C. verify contract enforceability
(para. 13); and
D. for wholly executory contracts,
verify that at least one party lacks the
enforceable right to unilaterally
terminate without penalty (para. 15)
Para. 14 scope criteria
A. commercial substance/effect on future
cash flows;
B. parties approve and are committed to
perform;
C. identification of parties' rights to goods/
services; andD. identification of payment terms
Figure 1
ED/2011/6 Revenue Recognition
Stage 1 - ContractAnalysis
STEP 2Verify contract is within
scope (ED para. 14)
Pass ED
para. 14 tests?
Do not recognize
revenue
No
Yes
No
Yes
Go to Measurement &
Recognition Module(Fig. 2)
Stage 1Contract Analysis
Copyright Kurt S Schulzke 2014
http://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdf -
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
10/20
CONTRACT EXISTENCE& ENFORCEABILITY
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
11/20
CONTRACT SCOPECRITERIA
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
12/20
LEISENRINGSLAMENT
Copyright Kurt S Schulzke 2014
In onlaw
jur
docuuncin sta
Henry Rees,
IASBs project
manager
James
Leisenring,
IASB Member
then
representing
the U.S.
Figure 2
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
13/20
Begin Recognition &
Measurement Module
(a) Identify separate
performance obligations
in the contract
ED paras. 23-30
(b) Determine the
transaction price
ED paras. 50-69
(c) Allocate transaction
price to performanceobligations
ED paras. 70-80
(d) Test for satisfaction
of performance
obligation throughtransfer of good or
service to customer by
shifting contro l
Recognize Revenue
Indicators of customer control
ED paras. 31-48
1. customers unconditional obligation to pay for the good
or service;2. shift of risks and rewards of ownership of goods; or
3. shift in legal title to or physical possession of the goods
Does the customer
control the good or
service?
Yes
No
Figure 2
ED/2011/6 Revenue Recognition
Stage 2Recognition & Measurement
Do not recognize
revenue
Customer must
have the present
right to obtain
substantially all of
the cash flows
from the asset by
using, consuming,
selling,
exchanging,
pledging or holdingit.
ED paras. 31-32.
Transaction price =
expected value or
most likely amount
of consideration to
be received. ED
paras. 52-55
Stage 2
Recognition &Measurement
Copyright Kurt S Schulzke 2014
http://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdfhttp://www.vanderbilt.edu/jotl/manage/wp-content/uploads/schulzke.pdf -
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
14/20
TRANSACTION PRICEEXPECTEDVALUE OR NOT?
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
15/20
VARIABLE CONSIDERATION
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
16/20
FILLING GAPS WITH PRIOR GUIDANCE
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
17/20
DISCLOSUREDISAGGREGATIONREQUIRED
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
18/20
DISCLOSURE EXAMPLERISK-BASEDDISAGGREGATION (ASC TOPIC 606-10-65-1)
An entity reports the following segments: consumer products, transportation, anaccordance with Topic 280 on segment reporting. When the entity prepares itspresentations, it disaggregates revenue into primary geographical markets, malines, and timing of revenue recognition (that is, goods transferred at a point inservices transferred over time).
The entity determines that the categories used in the investor presentations canmeet the objective of the disaggregation disclosure requirement in paragraphwhich is to disaggregate revenue from contracts with customers into categoriedepict how the nature, amount, timing, and uncertainty of revenue and cash affected by economic factors. The following table illustrates the disaggregatioby primary geographical market, major product line, and timing of revenue recincluding a reconciliation of how the disaggregated revenue ties in with the coproducts, transportation, and energy segments in accordance with paragraph
6.
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
19/20
DISCLOSURE EXAMPLERISK-BASEDDISAGGREGATION (ASC TOPIC 606-10-65-1)
Copyright Kurt S Schulzke 2014
-
5/19/2018 Brief Overview of the New FASB-IASB Revenue Recognition Standard
20/20
PRESENTER
Kurt S. Schulzke, J.D., CPA, CFE
Associate Professor of
Accounting & Business Law
Coles College of BusinessKennesaw State University
Phone: 770.423.6379
kurt_schulzke@kennesaw.edu
Kurt Schulzkeis an Associate Professor of Accounting at KennesawState University and Of Cournsel at Slappey & Sadd, LLC, where herepresents whistleblowers in SEC, IRS and False Claims Act cases.
He delivers seminars on financial reporting, corporate governance,corporate ethics, and family business in major U.S., European andLatin American venues. Kurt is an alumnus of the Harvard Program oNegotiations Teaching Negotiation in the Organizationand theJohannes-Kepler Universitaet - Georgia State University Law SchoolProgram on International Commercial Arbitration .
Prior to joining the Coles College faculty in 1990, Kurt worked for fouryears as an auditor and tax consultant at Price Waterhouse - AtlantaHe has been licensed as a CPA since 1987 and as a member of theGeorgia State Bar since 1998. He has served family-owned businesseas a board member, CFO and general counsel. He holds a J.D. from
Georgia State Universitys College of Law, cum laude, as well as B.S.and M.Acc. degrees from Brigham Young University. He is author ofWorld Accounting, a multi-volume Lexis-Nexis treatise on globalfinancial reporting, and has published articles on accounting andlegal topics in the Journal of Forensic Accounting Vanderbilt Journaof Transnational Law.
Copyright Kurt S Schulzke 2014
top related