The Financial Accounting Standards Board has issued what’s being called “the most significant revision to the U.S. Generally Accepted Accounting Principles’ revenue recognition standards in history.”

So Chris Roush, a principal in Rea’s Millersburg office, and Katie Snyder, a supervisor in our Wooster office, have confronted the changes head on to help business owners understand the new standard, while uncovering opportunities for new bottom line growth. During today’s episode, Chris and Katie explain what business owners need to know about this new standard, as well as the opportunities for potential revenue that it creates.

Five Steps of Revenue Recognition

The Financial Accounting Standards Board’s new standard includes five steps of recognizing revenue from contracts with customers:

• Identify contracts with your customers
• Identify the performance obligations in the contract (i.e. what is the customer going to get in exchange for what they pay?)
• Determine the transaction price
• Allocate the prices to the performance obligations, if there are multiple performance obligations
• Recognize revenue

If you are a business owner or financial professional, you will be interested in these other topics discussed in this episode:

• What changes are in store for financial statement preparers
• All GAAP financial statement preparers will need to enhance/expand footnote disclosures regarding revenue, even if there is no other impact
• How the new standard can actually be viewed as an opportunity to look at other areas of potential revenue

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