Amendments to Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606)

 

Overview

On May 28, 2014, the Financial Accounting Standards Board (FASB), responsible for Generally Accepted Accounting Principles (U.S. GAAP), and the International Accounting Standards Board (IASB), responsible for International Financial Reporting Standards (IFRS), jointly issued a converged standard on the recognition of revenue from contracts with customers.

In June 2014, the FASB and the IASB (collectively, the Boards) announced the formation of the joint Transition Resource Group for Revenue Recognition (TRG). The objective of the TRG is to inform the Boards about potential implementation issues that could arise when entities and organizations implement the new standard. The TRG also provides stakeholders with an opportunity to learn about the new standard from others involved with implementation. The TRG does not issue guidance. Additional information about the TRG, including how to submit an implementation issue, can be found here.

The objective of the Board’s standard-setting activities related to Topic 606, Revenue from Contracts with Customers, was to address challenges identified by the TRG in implementing and applying the new revenue standard in certain areas.

The amendments in the following Updates clarify or affect certain aspects of Topic 606 but do not change the core principle of the guidance in Topic 606.

1. On June 3, 2020, the Board issued Accounting Standards Update No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities
   •  Download Update 2020-05
2. On December 21, 2016, the Board issued Accounting Standards Update No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.
   •  Download Update 2016-20
3. On May 9, 2016, the Board issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.
   •  Download Update 2016-12
4. On April 14, 2016, the Board issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.
   •  Download Update 2016-10
5. On March 17, 2016, the Board issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).
   •  Download Update 2016-08
6. On August 12, 2015, the Board issued Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.
   •  Download Update 2015-14

Effective Dates

The amendments in these Updates affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in these Updates are the same as the effective date and transition requirements in Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. Accounting Standards Update No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, defers the effective date by one year for certain entities that had not yet issued their financial statements (or made financial statements available for issuance) reflecting the adoption of Revenue, as of the date the ASU was issued (June 3, 2020).
 

What Organizations Are Affected by the New Guidance in the Updates?

The amendments in these Updates affect entities with transactions included within the scope of Topic 606. The scope of that Topic includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The amendments to the recognition and measurement provisions of Topic 606 also affect entities with transactions included within the scope of Topic 610, Other Income.
 

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