Deloitte’s Roadmap: Revenue Recognition

Revenue Recognition

This Roadmap provides Deloitte’s insights into and interpretations of the accounting guidance in the revenue standard, which was issued in May 2014 by the FASB as ASU 2014-09 (codified primarily in ASC 606) and by the International Accounting Standards Board (IASB®) as IFRS 15.

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Preface On the Radar Contacts Chapter 1 — Overview Chapter 2 — Symbols and Defined Terms Chapter 3 — Objective and Scope Chapter 4 — Step 1: Identify the Contract Chapter 5 — Step 2: Identify the Performance Obligations Chapter 6 — Step 3: Determine the Transaction Price Chapter 7 — Step 4: Allocate the Transaction Price to the Performance Obligations Chapter 8 — Step 5: Determine When to Recognize Revenue Chapter 9 — Contract Modifications Chapter 10 — Principal-Versus-Agent Considerations Chapter 11 — Customer Options for Additional Goods or Services (Material Rights)Chapter 12 — Licensing Chapter 13 — Contract Costs Chapter 14 — Presentation Chapter 15 — Disclosure Chapter 16 — Effective Date and Transition Requirements Chapter 17 — Nonpublic-Entity Elections Chapter 18 — Sales of Nonfinancial Assets Within the Scope of ASC 610-20 Chapter 19 — Tax Considerations Chapter 20 — SEC, FASB, and Other Stakeholder Activities Chapter 21 — Implementation Activities Appendix A — Differences Between U.S. GAAP and IFRS Standards Appendix B — Codification Example Index Appendix C — Summary of Issues Addressed in the FASB Staff’s Revenue Recognition Implementation Q&As and/or by the TRG Appendix D — Roadmap for Implementation Appendix E — Titles of Standards and Other Literature Appendix F — Abbreviations Appendix G — Roadmap Updates for 2021

Since the original release of the revenue standard, the FASB and IASB, along with stakeholders from all industries, have focused on implementation efforts related to the standard’s adoption. In June 2014, a joint FASB/IASB transition resource group (TRG) for revenue recognition was created to discuss implementation issues related to the revenue standard and help the boards resolve any such issues that could give rise to diversity in practice. There have been eight TRG meetings (including two FASB-only TRG meetings), at which 52 staff papers in aggregate were discussed. The feedback the FASB received through these meetings resulted in multiple ASUs amending aspects of ASC 606 and related topics in the FASB Accounting Standards Codification. Further, the FASB deferred the effective dates twice by issuing ASU 2015-14 and ASU 2020-05, and it provided a practical expedient for nonpublic franchisors by issuing ASU 2021-02.

In addition, the 16 AICPA revenue recognition industry task forces have produced industry-specific interpretive guidance on the revenue standard. The task forces have developed updates to the AICPA’s industry guides that address over 130 accounting matters related to revenue recognition, presentation, and disclosure.

The SEC staff has been active as well. In addition to monitoring implementation efforts and discussing its expectations for transparent disclosures, the staff has updated its revenue guidance with the issuance of SAB 116, which effectively supersedes SAB Topic 13. In addition, at the July 20, 2017, EITF meeting, the SEC staff provided significant relief to registrants that are required to include financial statements or financial information of other reporting entities in their SEC filings. Specifically, the SEC staff announced that it would not object to elections by certain public business entities (PBEs) to use the non-PBE effective dates for the sole purpose of adopting the FASB’s standards on revenue and leases.

The 2021 edition of this Roadmap includes updated and expanded guidance as well as On the Radar, a new section (also available as a stand-alone publication) that briefly summarizes emerging issues and trends related to the accounting and financial reporting topics addressed in the Roadmap.