On April 1, 2015 (ironically April Fools Day) the FASB proposed deferral of the effective date of the new revenue standard, Revenue from Contracts with Customers (ASC 606), by one year for both public and private entities. The FASB will issue an exposure draft with a 30 day comment period. If the delay is approved (which appears likely), public entities would be required to apply the new revenue standard to annual and interim reporting periods beginning after December 15, 2017. For example, for calendar year public entities, revenue would need to be reported under the new method beginning with the quarter ended March 31, 2018. Private entities would apply the new revenue standard to annual reporting periods beginning after December 15, 2018. However, private companies would apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2019. That means private companies, unlike public companies, would not be required to apply the new revenue standard in interim periods within the first year of adoption.
We advise our clients that rather than viewing the one year delay simply as a reprieve, it should be considered an opportunity to take the additional year to get ahead of the curve.
To find out how Puncel Consulting Associates can help you understand and plan for the new revenue recognition standard, contact us.
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