Vrakas CPAs, Here Are Your Articles for Wednesday, October 10, 2018
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United States accounting principles require the adoption of a new standard on revenue recognition for periods beginning on or after December 15, 2018. The new standard supersedes the former guidance and most industry specific guidance to remove inconsistencies, improve comparability between companies and industries and to provide guidance in revenue recognition matters. The new standard describes what it takes to form a contract with a customer and provides guidance on when to consider contract modifications a separate contract. It also provides criteria to consider when determining if control over a good or service has been transferred.

Some of the primary differences from the previous accounting rules are that the selling price doesn’t need to be reasonably assured to recognize revenue, the selling price can be variable and can be estimated. Additionally, revenue is now recognized upon the transfer of control of a good or service to a customer, rather than upon the transfer of the risks and rewards of ownership to the customer. The new standard also introduces the concepts of separate performance obligations and distinct goods and services.

To determine when to recognize revenue a five step process must be considered.

Please click here to be directed to Vrakas CPAs blog on the five steps. 

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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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