ASC 606 is an updated accounting standard issued by FASB and IASB that is designed to ensure revenue recognition is consistent across industries, geographies, and capital markets. It is intended to increase financial statement comparability across companies and reduce the complexity in revenue recognition.
It applies to virtually all sectors where there are “contracts with customers” (exceptions include leases, insurance, and financial instruments).
The transition period for ASC 606 is underway. If it affects your business then save yourself the hassle and start planning and re-evaluating your contracts now. Don’t underestimate the time or effort required to bring your systems and processes into compliance especially if you are also having to update your systems to accommodate the introduction of VAT.
While it may appear that the changes primarily take place in 2018, there is a 2-year accounting retrospective. Take advantage of this time to prepare for conducting business under this new guidance.
