A Roadmap to Applying the New Revenue Recognition Standard

This Roadmap provides Deloitte’s insights into and interpretations of the accounting guidance under the new revenue standard as codified in ASC 606, ASC 340-40, and ASC 610-20.

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Preface Contacts Background 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 — Changes Made in the 2020 Edition of This Publication

Since the issuance of the new revenue standard on May 28, 2014, the FASB and the International Accounting Standards Board, along with stakeholders from all industries, have focused on implementation efforts related to the adoption of ASU 2014-09 and IFRS 15 (and related ASUs and IFRS® Standards). Since the TRG’s initial formation in June 2014, 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.

The past several years have also seen significant activity by the 16 AICPA revenue recognition industry task forces. The task forces have worked on 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 new standards on revenue and leases.

The 2020 edition of Deloitte’s A Roadmap to Applying the New Revenue Recognition Standard includes additional guidance and examples that reflect (1) all significant standard-setting and SEC developments through the September 16, 2020, FASB meeting and (2) our own interpretations in light of those developments. In addition, we have reorganized much of the Roadmap’s content (e.g., by reformatting the Q&As of last year’s edition as narrative text) to present it in a more user-friendly manner.

Although the new standard is now effective for most companies, we expect additional implementation challenges to arise as (1) business models emerge or evolve and (2) contracts are created or amended. Accordingly, we will continue to develop guidance that we believe will help stakeholders with interpreting the standard.