Understanding the New Revenue Recognition Standard
The revenue recognition standard utilizes a combination of accrual accounting and matching principles to define the specific parameters under which revenue is recognized. In recent years, the Financial Accounting Standards Board (FASB) realized the need to unify fragmented revenue recognition guidance. The resulting Accounting Standards Update No. 2014-09 – revenue from contracts with customers (Topic 606) establishes principles surrounding the nature, timing, and uncertainty of revenue from contracts with customers to properly report valuable data to financial statement users.