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On May 9, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow-scope Improvements and Practical Expedients. The core revenue recognition principle in Topic 606 is unchanged. The ASU seeks to clarify guidance in response to implementation issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition (TRG). Specifically, the amendments relate to:
FASB expects that these amendments will continue to maintain the convergence between Topic 606 and IFRS 15 Revenue from Contracts with Customers by reducing the potential for diversity in practice. Minor differences in financial reporting between US GAAP and IFRS could result from the following four principal areas:
The amendments are effective as at the deferred effective date of Topic 606 noted in ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. Public business entities, certain not-for-profit entities and certain employee benefit plans should apply amended Topic 606 for fiscal years beginning after December 15, 2017, including interim periods therein. Earlier application is permitted only as of fiscal years beginning after December 15, 2016, including interim periods therein. All other entities are required to apply amended Topic 606 for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Earlier application is permitted as of fiscal years beginning after December 15, 2016, including interim periods therein or for interim periods within fiscal years beginning one year after the fiscal year in which the entity first applies Topic 606.
To access the full script of ASU No. 2016-12 click here.
For more information on the financial reporting library, contact a local MNP Assurance Professional, or Jody MacKenzie, Director, Assurance Professional Standards.
This communication contains a general overview of the topic and is current as of May 9, 2016. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2016. All rights reserved.
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