How is your understanding of revenue recognition? In compliance? Are you ready for the pending changes that are supposed to make this volume(s) topic easier for all to adopt one standard? Here are some basic small business need-to-know.
Excerpt: The accounting for revenue recognition is one of the most important and complex challenges facing companies today. Revenue recognition has been and continues to be one of the top accounting and auditing areas of risk. Failure in internal controls over revenue recognition remains one of the most significant causes of material weakness in internal controls over financial reporting.
Many companies offer multiple solutions to their customers’ needs. Those solutions may involve the delivery or performance of multiple products, services, or rights to use assets, and performance may occur at different points in time or over different periods of time. There are many complex rules for recognizing revenue when contracts / arrangements have more than one revenue generating activity. Further, there is increasing complexity of revenue recognition for software; since many products include embedded software, this complexity can apply to a broad range of industries.
While current rules are detailed and rapidly evolving, additional major changes are on the horizon.
Read full article via Accounting for revenue recognition: PwC.