Originally published in Seattle Business Magazine, this article explains the 5-step framework to revenue recognition and how to prepare for the transition to the new standard.
Revenue is an important metric demonstrating the financial strength of a business. Currently, U.S. Generally Accepted Accounting Principles (GAAP) includes many revenue recognition requirements across many specific industries. The Financial Accounting Standards Board (FASB) is expected to finalize a new standard on revenue recognition in the 4th quarter of 2013. The proposed new standard is a single, principal-based framework that will be followed by nearly all companies, with the objective of improving financial reporting and comparability across industries.