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Preparing for the New Revenue Recognition Standard

The adoption date of the new standard Revenue from Contracts with Customers (Accounting Standards Codification (ASC Topic 606) is –
sued by the Financial Accounting Standards Board (FASB) is imminent. Most nonprofit organizations (nonpublic entities) should apply ASC 606 for annual reporting periods beginning after Dec. 15, 2018.

Nonprofits have the option of early adoption for fiscal years beginning after Dec. 15, 2016. Although there seems to be plenty of time to prepare for adopting ASC 606, it is advisable to start evaluating the impact on your organization and making any changes needed to apply the standard as soon as possible.

ASC 606 represents a change from rules-based accounting to a principal-based focus. In some situations, such as estimates related to variable considerations (discounts, incentives, credits and price concessions), you will be required to make more estimates and use more judgment than with the current guidance.

Author, Exempt Magazine

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