U.S. GAAP requirements for the new revenue recognition standard (ASC update numbers: 2014-9, 2015-14, 2016-8, 2016-10 and 2016-12; ASC 606) was effective yesterday, January 1, 2019, for non-public business entities (private companies). This new standard applies to private companies with annual reporting periods beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Therefore, it must be adopted and reported on calendar year-end 2019 financial statements.
The purpose of this standard is to clarify the principles for revenue recognition and establish common revenue recognition guidance. Businesses must assess, and if impacted by this new standard, change how revenue and certain costs are identified, recognized, recorded and presented on their financial statements including a significant expansion of revenue disclosures. Public companies were required to apply this new standard for calendar 2018 year-end annual reporting. Now it’s time for private companies to adopt it as well.
Contact your Alerding CPA Group representative if you need any assistance adopting this new standard.