Private companies that are beginning to assess the impact of the new standard can draw upon lessons learned and best practices derived from the efforts undertaken by public companies to implement the new standard. Calendar year-end public companies must adopt the new standard on January 1, 2018, and private companies have one additional year. What are the “trouble spots” companies need to consider when implementing ASC 606?
Critical Technical Accounting Determinations
- Determination of performance obligation, specifically distinct within the context of the contract
- Transition method selection
- Application of contract modification guidance
- Deciphering complicated sales commission plans
- Estimating variable consideration
- Calculating standalone selling price
- Application of the portfolio approach
- Calculating and operationalizing backlog
- Disaggregation of revenue
- SAB 74 disclosures
Operational and Other Challenges
- Lack of a PMO
- Resource constraints and limited time
- System implementations and changes to handle accounting changes or disclosures (dual-reporting)
- Calculating the retained earnings adjustment in a way that is efficient yet auditable
- Auditor participation not early enough in the adoption process
- Inadequate internal controls around the adoption
- Specifically identifying commissions to contracts
What aspects of the implementation of the new standard have you found or anticipate to be most challenging? Visit our Technical Accounting and Financial Reporting page for more information about how we can support your organization.
Download our guide on ASC 606
Whether or not you’ve implemented already, our guide provides you steps in the right direction.
WHAT’S IN THE E-BOOK
Identify the strategic opportunities in compliance
- How to engage and educate stakeholders across your company
- How to meet unexpected challenges: the value of a dedicated project manager
- How to build a path to compliance before your company’s reporting deadline
- Why you need a customized adoption plan
Get up to speed on revenue recognition
Several methods may lead to compliance with the new ASC 606 revenue recognition standard, but only one is best for your company’s future growth. See how we can help you adopt ASC 606 by the fast-approaching deadline for private companies.